CHICAGO – Economic growth slowed slightly to a moderate pace from early July to August and reports in the agriculture sector were mixed, but overall positive in the Federal Reserve Districts of the Corn Belt.
The Federal Reserve’s beige book summarizing economic conditions was released on September 8. This document summarizes feedback received from contacts outside the Federal Reserve system collected from bank and branch managers, as well as interviews and online questionnaires completed by businesses, community organizations, economists, market experts. . and other sources.
This report was prepared at the Federal Reserve Bank of New York based on information gathered no later than August 30. Here are comments related to Corn Belt farming.
“Economic activity in the 7th District of the Federal Reserve increased moderately in July and early August and Contacts expected growth to continue at this rate over the next few months,” the report said.
Although most farm prices were higher than a year ago, farm incomes are expected to decline in 2021 with the end of government support payments linked to the pandemic.
Cattle and egg prices increased during the period considered. 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 reach record levels, although parts of the region still faced drought.
There were growing concerns that strained logistics would lead to shortages of parts for agricultural equipment during harvest and block the movement of crops to markets. The value of farmland has steadily increased.
The Chicago district includes the northern two-thirds of Illinois and Indiana, and all of Iowa, Wisconsin, and Michigan.
Agricultural conditions in the 8th arrondissement remained unchanged from the previous report. Compared with early July, the percentage of corn and soybeans rated fair or better has slightly decreased while the percentage of rice has increased slightly and cotton has not seen any change.
Contacts said non-labor and labor costs have increased, but revenues are also increasing. A contact noted that the drought in South America has pushed up grain prices. They also noted shortages of maintenance parts related to COVID.
The Federal Reserve District of St. Louis includes the southern parts of Illinois and Indiana and the eastern half of Missouri, as well as parts of Tennessee, Arkansas, Kentucky, and Mississippi.
As extreme drought conditions wreaked havoc in many areas, agricultural producers in the 9th district continued to benefit from high commodity prices.
Farm bankers reported a general increase in farm income and spending in the second quarter, with a positive outlook, but more subdued for the third quarter.
However, livestock and dairy farmers suffered from the impact of drought on hay availability and grazing conditions, while corn and soybean crop conditions deteriorated.
The Minneapolis-based district includes all of Minnesota, the Dakotas and Montana, northwestern Wisconsin, and all of Michigan’s upper peninsula.
In the agricultural economy of the 10th district, farm incomes and credit conditions continued to improve despite the weakness of the cattle industry and severe drought in some areas.
Crop and pork prices remained at multi-year highs, and corn and soybean conditions were slightly better than the national average in most states in the district until early August. However, the profit opportunities for cattle ranchers remained limited.
Contacts in the meat packaging industry also reported that tight labor markets were slightly restricting the production capacity of some facilities.
Due to widespread drought, over 60% of Wyoming’s pastures and rangelands were in poor or very poor condition in early August, compared to about 30% in Colorado and New Mexico and 20% or less in all other states.
The Kansas City district includes the western part of Missouri, Kansas, Nebraska, Oklahoma, Wyoming, Colorado, and northern New Mexico.