Fed districts report softened ag conditions

CHICAGO — Overall economic activity increased slightly since early January, with eight of the 12 Federal Reserve districts reporting slight to modest growth while ag conditions dipped, according to the latest Beige Book.

The Federal Reserve System’s Beige Book, published March 6, reported economic conditions since the last publication in early January.

Each Federal Reserve Bank gathers information on current economic conditions in its district through reports from bank and branch directors, plus interviews and online questionnaires completed by businesses, community organizations, economists, market experts and other sources.

Here is what the Corn Belt districts reported regarding the agricultural conditions.

Chicago

“Income prospects for 2024 continued to deteriorate for Seventh District crop producers, while the outlook for livestock producers improved,” the report stated.

Corn prices edged down once again, as low demand and a large 2023 harvest boosted stocks. Soybean and wheat prices were also down some.

Fertilizer costs for crop production were down from the fall and well below those of a year ago.

Hog, cattle, egg and dairy prices increased from the previous reporting period. Margins for dairy farmers remained tight as labor costs rose, though lower feed costs helped some.

The Chicago district includes the northern two-thirds of Illinois and Indiana, all of Iowa, the southern two-thirds of Wisconsin and Michigan’s Lower Peninsula.

St. Louis

Eighth Federal Reserve District agriculture conditions have remained stable since the previous report.

Total winter wheat acreage planted was down about 5% relative to the total planted the year before. Reports indicate the decline was expected and consistent with national planting patterns.

A decline in fertilizer costs was offset by increasing fuel and interest costs.

District contacts were mixed on the impact global commodity markets are having on their operations.

While some reported benefiting from tightened export markets due to international shipping disruptions and high demand — particularly for cotton — others reported that declining commodity prices and competition from major exporters such as Brazil had depressed their outlook.

“Contacts indicated the ban in early February on specific pesticides commonly used for major district crops and subsequent regulatory changes were sources of uncertainty for future planting and growing decisions,” according to the report.

Most district contacts described their outlook as unchanged or worsening.

The St. Louis district includes the southern parts of Illinois and Indiana and eastern half of Missouri, as well as parts of Tennessee, Arkansas, Kentucky and Mississippi.

Minneapolis

Ninth Federal Reserve District agricultural conditions declined, led by a drop in farm income in the last quarter of 2023 relative to a year earlier, according to most lenders responding to an agricultural conditions survey.

Capital spending also decreased on balance, while farm household spending continued to increase.

Sector contacts reported that current prices for some commodities were below breakeven levels for many producers; however, input costs have moderated somewhat.

Kansas City

Conditions in the 10th Federal Reserve District farm economy softened in February, but agricultural credit conditions remained sound.

Crop prices declined moderately over the past month alongside reports of stronger yields and production in the 2023 growing season than was previously estimated.

“Grain stocks were higher coming into 2024 than a year ago in most districts states. Although strong yields could support revenues, producers with large shares of the harvested grain currently in storage appeared likely to sell at unfavorable prices,” the report stated.

In the livestock sector, cattle prices remained strong alongside reports of additional declines in cattle herds.

Farm financial conditions have moderated over the past year, but credit stress and farm loan delinquencies remained low.

Looking ahead, contacts continued to cite ongoing risks associated with high expenses, commodity market developments and high interest costs.

The Kansas City district includes the western part of Missouri, Kansas, Nebraska, Oklahoma, Wyoming, Colorado and the northern half of New Mexico.