click image to zoom The Federal Reserve Bank released its latest Beige Book October 15th—which is a summary of economic conditions in each of the 12 fed districts. It indicates the farm economy is rolling along with few burps and stumbles. Not all of the Fed districts report on agriculture, and it is tangential in a couple, the key assessment of agriculture comes from those in the heartland.
Although this year’s drought affected the harvest, corn and soybean yields in parts of the District were higher than expected in September. In fact, a contact reported that the local harvest would be the best in four years.
Soybean yields were more variable than and not as favorable as corn yields. In the areas affected by drought, subsoil moisture and genetic advances in seeds reduced yield losses. Rains in September slowed harvesting, even damaging some crops that were mature.
Crops harvested and sold early brought a premium due to low crop stocks prior to harvest. Since then, corn prices have dropped relatively more than soybean prices. With much of the harvest still unsold, farmers will store more of the crop in the hope of better selling opportunities over the winter.
Milk and cattle prices increased from the previous reporting period, while hog prices decreased. Livestock producers continued to benefit from lower feed costs. Fruit crops bounced back strongly from last year’s devastating freeze, leading to lower prices.
Eighth District—St. Louis
Crop conditions across the District remained relatively unchanged from our previous report. On average, 89 percent of the District states’ corn, cotton, sorghum, and soybean crops were rated in fair or better condition. Similarly, about 80 percent of the District states’ pastureland was rated in fair or better condition.
Harvest progress in the District lagged behind the 5-year average for all five major crops. The District corn, cotton, and rice harvests were 19 percent, 14 percent, and 18 percent behind their five-year averages, respectively. The District sorghum and soybean crops fared slightly better at 9 percent and 8 percent behind their five-year averages, respectively.
Agricultural conditions deteriorated somewhat since the last report. Drought conditions returned to the eastern part of the District in late summer, with parts of eastern North Dakota and central Minnesota seeing severe drought conditions in early September.
Crop progress remains behind average due to late spring planting, and yields are likely to be affected. While much of the District corn and soybean crops remain in good or excellent condition, overall quality has fallen in recent weeks.
However, in Minnesota, apple growers are expecting a strong harvest. Prices received by farmers in September increased from a year earlier for hogs, cattle, milk, dry beans and chickens; prices for corn, wheat, soybeans, hay, eggs and turkeys fell from a year earlier.
Tenth District—Kansas City
In the agriculture sector, crop production expectations were little changed from the previous survey period, but falling prices lowered farm income expectations. With most of the corn and soybean crops still in relatively good condition, overall District yields were expected to be about average.
As harvest began, however, a greater probability of near-record corn and soybean production nationally led to a drop in prices, cutting farm income expectations. Meanwhile, heavy rainfall in Colorado and flooding along the South Platte River affected some agricultural lowlands.
Scattered storms slowed harvest activity and winter wheat planting, but helped soil moisture conditions. Lower feed prices narrowed losses for cattle feedlot operators and improved profitability for hog producers.
Weaker farm income prospects were expected to curtail farm household and capital spending, but demand for quality farmland remained strong.
The District remained largely in drought, although the severity lessened in late September in Texas due to good rainfall and the excessive heat tapering off. The harvest progressed normally for row crops, and conditions were mostly fair to good. Improved moisture conditions increased optimism for the winter wheat crop. Beef exports increased over the reporting period.
Weather issues are still a significant dynamic for agriculture, impacting crops (and subsequently livestock) because of both drought and excessive moisture. While crop prices have declined, they have not had a significant negative impact on land values. And economic conditions were generally good for agriculture.