Fed Assesses US Ag Economy, Finds Conditions Mixed

Last week, the US Federal Reserve Board released its October Beige Book update, a summary of commentary on current economic conditions by Federal Reserve District, that contained some observations about the US agricultural economy.

 

SIXTH DISTRICT – ATLANTA

 

Agricultural conditions remained mixed.  Parts of Alabama, Georgia, the Florida panhandle and Tennessee continued to experience abnormally dry to moderate drought conditions.

The USDA designated several counties as natural disaster areas because of damages and losses to weather events this year.  Cotton, corn and peanut production forecasts were ahead of last year’s production while rice and soybean production forecasts were below.

Prices paid to farmers in July were up from last year for corn and beef but down for cotton, rice, soybeans, broilers and eggs.  On a month-over-month prices increased for corn, cotton, rice and soybeans but declined for beef, broilers and eggs.

 

SEVENTH DISTRICT – CHICAGO

 

The corn and soybean harvest got off to a slow start as rains delayed fieldwork and heavy spring rains delayed planting, so crop maturity was up to a month behind.

Contacts had mounting concerns about how much of this year’s crop would be able to mature fully.  They expected the harvest to be well below those of recent years.

Corn and soybean prices moved higher, especially toward the end of the reporting period.  Hog and cattle prices drifted down.

 

EIGHTH DISTRICT – ST. LOUIS

 

Agriculture conditions declined modestly compared with the previous report.  Production and yield forecasts fell for corn and soybeans from August to September but improved for cotton.  Expected rice production also declined, but expected yields ticked up.

Corn, rice and soybean production was projected to decrease sharply from 2018, largely from the unusually wet weather and flooding during the planting season.

The outlook remained relatively pessimistic because of depressed commodity prices and trade uncertainty.

Farmers in southern Indiana also expressed concern over the recent lack of rain.

 

NINTH DISTRICT – MINNEAPOLIS

 

Heavy rains that hampered planting this season persisted into the fall and may complicate harvests.  Recent forecasts indicated that corn and soybean production may decrease 10% to 20% from last year.

 

TENTH DISTRICT – KANSAS CITY

 

Agricultural economic conditions remained weak.  Row crop and cattle prices generally were stable after sharp declines in the prior report.  US corn and soybean production was seen lower but not enough to affect supplies much.

A slight increase in corn production was seen and could mean a slight uptick in revenues.  But soybean production was expected to be moderately lower with weak prices.

 

ELEVENTH DISTRICT – DALLAS

 

Hot, dry weather continued.  Some areas seeing extreme drought, so crop and pasture conditions were deteriorating.  Yields were favorable for corn and sorghum.  Wheat yields were good, but prices weak.

 

CATTLE, BEEF RECAP

 

Cash cattle trading was reported this week at $174 to $175 per cwt on a dressed basis, steady to up $1 from last week.  Live-basis trading occurred at $109 to $110 per cwt on a live basis, up $1 to down $2.

The USDA choice cutout Thursday was up $2.34 per cwt at $225.62, while select was up $0.15 at $199.09.  The choice/select spread widened to $26.53 from $24.34 with 96 loads of fabricated product sold into the spot market.

No cattle were tendered for delivery at zero against the Oct live cattle futures contract Thursday.  Three heifer and 15 steer contracts were retendered for delivery at 2, and three heifer and 15 steer contracts were demanded at 2.

The CME Feeder Cattle index for the seven days ended Wednesday was $144.96 per cwt, up $0.12 from the previous day.  This compares with Thursday’s Oct contract settlement of $145.22, up $0.20.