It is hard to find someone not watching the Federal Reserve’s Open Marketing Committee, which sets interest rates. The FOMC has been completely focused on the US economy to identify all of the pluses and minuses that will help it determine the direction of monetary policy.
One of the issues it watches is the state of the agricultural economy and its asset base, and reports that in the Beige Book, which contains the economic research of the various Federal Reserve Banks that is conveyed to the Central Bank.
In the Beige Book released on July 17, the Fed summarized the state of the farm economy, saying, “Agricultural conditions varied across the Districts because of differing weather conditions.
Crop conditions improved in the Chicago and St. Louis Districts, while agricultural production increased in the San Francisco District and is expected to improve in the Kansas City District. Extremely wet conditions delayed planting and even resulted in some farmers in the Richmond and Minneapolis Districts planting soybeans instead of corn. Excessive rains in the Richmond District also damaged the wheat crop in some areas.
Contacts noted persistent drought conditions in some areas of the Kansas City and San Francisco Districts and in most of the Dallas District. Winter wheat harvest output yields were highly variable because of crop damage from freezing and drought in the Dallas and Kansas City Districts. The condition of pastureland in the Atlanta and St. Louis Districts improved since the previous report.”
The Federal Reserve Banks that service the bulk of the Corn Belt include:
Seventh District at Chicago
“Crop conditions improved over the course of the reporting period, with the crop ending the period in better shape than a year ago. District farmers managed to get their crops in the ground despite additional planting delays caused by the unseasonably wet weather. Only a small percentage of acres will not grow a crop, where water pooled in low-lying areas and replanting was not possible. Fruit crops could produce record yields this year, in sharp contrast with the large losses seen a year ago. With stocks of corn and soybeans expected to remain at very low levels until the fall harvest, corn and soybean prices moved higher. The increase in feed costs negatively affected livestock operations, and contacts noted that it would lead to careful management of feed purchases until anticipated declines in crop prices are likely to materialize following a potentially record fall harvest. The first cutting of hay was mostly complete and was much better than last year. Supported by rejuvenated pastures, milk output also increased. Milk prices were roughly unchanged during the reporting period, while hog prices surged, and cattle prices were lower.”