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On Wednesday, the Federal Reserve released its Beige Book August 2021 update, a summary of comments on current economic conditions by the Federal Reserve District. The report included several observations regarding the American agricultural economy.
* Sixth District – Atlanta– “Agricultural conditions have remained mixed. Widespread rains relieved the district of drought conditions. After planting was completed, harvest conditions for the district’s maize, cotton, soybeans, groundnuts and rice were mostly comparable to last year. The district’s agricultural production forecast was up year-over-year for cotton, soybeans, maize and peanuts, but down for rice. On a month-to-month basis, production forecasts for the Florida orange crop were up in July while the grapefruit production forecast was unchanged; both forecasts remained below last year’s production levels. At from one year to the next, the USDA says cropland value is on the rise across the states of the district. The USDA reported year over year, prices paid to farmers in June were up for corn, cotton, soybeans, cattle, broilers, eggs and milk, but down for rice. On a month-to-month basis, prices were up for corn, cotton, rice, cattle and broilers, but down for soybeans, eggs and milk.
* Seventh District – Chicago – “Although most agricultural prices were higher than a year ago, farm income are expected to decline in 2021 with the end of government support payments related to the pandemic.
“Cattle and egg prices increased over the reference period. Milk producers faced lower margins as transportation costs increased and producer prices moved mainly sideways. Contacts hoped that reopening schools would stimulate demand for bottled milk. Pork, corn and soybean prices have retreated from their recent highs.
The relatively small supply of crops helped support prices for corn and soybeans. The district’s corn and soybean crops were expected to be near record levels, although parts of the region still face drought.
“The worries grew tense logistics would lead to shortages of parts for agricultural equipment during harvest and block the movement of crops to markets. The value of farmland continues to climb. “
* Eighth district – St. Louis– “Agricultural conditions remained unchanged of our previous report. Compared to early July, the percentage of corn and soybeans rated fair or better decreased slightly while the percentage of rice increased slightly and cotton saw no change. Contacts indicated that non-work and work costs have increased but income also increases. A contact noted that the drought in South America has pushed up grain prices. They also noted COVID-related maintenance parts shortages. “
* Ninth District – Minneapolis– “As extreme drought conditions wreaked havoc in many areas, agricultural producers in the district continued to take advantage of high commodity prices.
“Agricultural bankers have indicated greatly increased agricultural income and spending in the second quarter, with a positive but more subdued outlook for the third quarter. However, pastoralists and dairy farmers have been suffering from the impact of drought on hay availability and grazing conditions, while conditions of corn and soybeans were deteriorating. “
* Tenth District – Kansas City–
In the agricultural economy of the Tenth District, farm incomes and credit conditions continued to improve despite the weakness of the cattle industry and severe drought in some areas.
“Crop and pig prices remained at multi-year highs, and the condition of corn and soybeans was slightly better than the national average in most states in the district until early August. However, profit opportunities for livestock keepers remained limited. Contacts in the meat packaging industry also reported that tight labor markets slightly limited production capacity in some facilities. Due to widespread drought, over 60% of Wyoming’s pastures and rangelands were in poor or very poor condition by early August; compared to about 30% in Colorado and New Mexico and 20% or less in all other states.
* Eleventh District – Dallas – “Texas was nearly drought free at the end of the reporting period, although drought conditions persisted in New Mexico. Sufficient soil moisture improved growing conditions for wheat and row crops, allowing many growers to achieve good yields. Preliminary reports indicate higher production this year compared to last year for the main crops of Texas: cotton, sorghum, corn and soybeans.
Crop prices remained high, supporting profitability.
“Rising production costs are a concern going forward, but the outlook was generally optimistic. In the livestock sector, grazing conditions were favorable and prices for cattle and poultry increased.
* Twelfth District – San Francisco– “Conditions in the agriculture and resource sectors have improved slightly online. Domestic and international demand for meats, fruits, vegetables, nuts and seafood remained strong. Supply chain disruptions continued to hamper trade with Asia, although shipping delays have eased somewhat in recent weeks. At the same time, several producers in the Pacific Northwest noted that extreme heat and drought conditions caused considerable damage to this year’s wheat and tree fruit yields, which should further reduce available stocks. “
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