On Wednesday, the Federal Reserve Board released its May 2018 Beige Book update, a summary of commentary on current economic conditions by Federal Reserve District.
Keith Good of the “Illinois Farm Policy News” said the report included several observations pertaining to the US agricultural economy. This is a summary of those comments by district.
SIXTH DISTRICCT – ATLANTA
Drought conditions abated in parts of Alabama and Georgia but deteriorated slightly in south Florida.
Year-over-year, prices paid to farmers in March were up for corn, rice, soybeans, broilers and eggs, flat for beef and down for cotton.
SEVENTH DISTRICT – CHICAGO
The 2018 farm income outlook brightened again, with improvements concentrated in crops.
Nonetheless, several contacts expressed unease over the potential effect of international trade policies on farming.
After weather delays, corn and soybean planting proceeded quickly in Illinois and Indiana, advancing ahead of normal.
However, Iowa and Wisconsin were somewhat behind typical planting paces.
Corn prices rose during the reporting period, while soybean prices drifted down.
Dry weather and the late spring hindered pasture development, leading to hay shortages and higher prices. Cattle and egg prices were down, but hog and dairy prices moved up.
EIGHTH DISTRICT – ST. LOUIS
After concerns about wet, cold weather delaying planting, mid-May planted acreage for corn, cotton and soybeans were, respectively, 13, 12 and 24 percentage points above the same time last year.
Contacts said prospective Chinese tariffs on US soybeans would be damaging to exporters but seemed unlikely.
NINTH DISTRICT – MINNEAPOLIS
While increases in some commodity prices were viewed positively, farmers also were concerned about access to international markets.
Late-season snows delayed spring planting, with crop progress well behind five-year averages.
TENTH DISTRICT – KANSAS CITY
The farm economy continued to weaken but the pace of deterioration slowed with a slight uptick in agricultural prices. Prices increased slightly during the survey period, but farm income continued to decline, and demand for financing remained high.
Bankers generally expected loan demand to increase in coming months and continued to report higher interest rates on all types of agricultural loans.
However, farmland values remained relatively stable and loan delinquency rates low. Contacts expressed concern about farm liquidity after further income declines, but the relative stability of farmland values provided ongoing support for producers and lenders.
ELEVENTH DISTRICT – DALLAS
Drought conditions continued to plague much of west Texas and southern New Mexico, particularly in the Texas panhandle. Conditions for winter wheat were much poorer compared with last year.
Planting continued, and crops were in mostly fair to good condition, but there was concern about dry weather potentially causing below-average yields. Given current prices, grain farmers need at least average yields to be profitable this year.
Cattle prices rose, largely because of seasonal factors but also because of very strong domestic and international demand.
TWELFTH DISTRICT – SAN FRANCISCO
Current inventories and yield expectations for a variety of crops fell because of lower-than-expected precipitation.
CATTLE, BEEF RECAP
Only 225 head of fed cattle sold Wednesday on the Livestock Exchange Video Auction at $110 per cwt, versus sales four weeks previous at $122.40.
Cash cattle traded Thursday at $110 per cwt on a live basis, steady with last week. No dressed-basis trading was reported but happened last week at $177.
The USDA choice cutout Thursday was down $0.48 per cwt at $228.20, while select was up $0.09 at $204.47. The choice/select spread narrowed to $23.73 from $24.30 with 122 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday, was $134.82 per cwt, down $0.04. This compares with Thursday’s Aug settlement of $147.40, down $1.15.