Thin margins remain amid economic growth – AgriNews
CHICAGO — The trend of mild to moderate economic growth continues in the Federal Reserve Districts.
Current economic temperature survey results were reported in the Beige Book released on June 1, based on information collected by May 23.
This document summarizes comments received from contacts outside the Federal Reserve system and does not constitute commentary on the opinions of Federal Reserve officials.
Each Federal Reserve Bank collects information about current economic conditions in its district through reports from bank and branch managers, as well as interviews and online questionnaires completed by businesses, community organizations, economists, market experts and other sources.
Here are the agriculture-related comments from the corn belt districts.
“Net farm income expectations for 2022 have changed little overall over the review period, with prices and costs increasing by similar amounts. Corn, soybean and wheat prices were all up, as were diesel and propane prices,” according to the Federal Reserve Bank of Chicago.
Cool, wet weather slowed spring planting of corn and soybeans. In addition, concerns remained about whether fertilizers would arrive on farms on time.
Strong exports of dairy products have helped push up milk prices. Bird flu continued to ravage poultry farms, driving up the price of eggs. Hog prices fell, while cattle prices fell.
As with farmers, herders have also faced higher input costs. Farmland prices continued to rise sharply.
The Chicago District includes the northern two-thirds of Illinois and Indiana, all of Iowa, the southern two-thirds of Wisconsin, and the lower peninsula of Michigan.
Agricultural conditions in the 8th Federal Reserve District have improved slightly since the previous report.
Contacts reported low margins despite rising raw material prices due to rising input and labor costs, but remained optimistic due to continued strong demand.
The contacts noted that rising energy prices have created an unprecedented opportunity for alternative energy products and other new technologies in the sector.
The percentage of row crops planted has increased since the previous reporting period, but is down from this period in 2021.
Progress in planted acres is down this year for every crop and every state in the district, reflecting production issues due to personnel and supply chain issues.
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.
Agricultural conditions in the 9th Federal Reserve District remained strong. According to the first quarter survey of agricultural credit conditions, 87% of respondents said they had increased their agricultural income compared to the same period a year earlier.
Farmland values rose rapidly. However, due to an unusually cold and wet spring, planting and crop progress have lagged far behind in much of the district, with the exception of Montana and western portions of the Dakotas, where drought conditions were endemic.
The Minneapolis-based district includes all of Minnesota, the Dakotas and Montana, the northern third of Wisconsin, and the Upper Peninsula of Michigan.
“Agricultural commodity prices remained at multi-year highs, providing continued tailwinds to the agricultural economy in the Federal Reserve’s 10th District. Market conditions remained favorable for prices of all major commodities in the region and prices for wheat, corn, soybeans, cotton and livestock increased slightly from the previous month,” reported the Beige Books.
Farm income and credit conditions also improved further during the last survey period. However, contacts expected conditions to soften slightly in the coming months and many raised concerns about rising input costs, widespread inflationary pressures and severe drought.
The western and southern parts of the region have been most exposed to drought, affecting wheat, hay and pasture conditions that could reduce profit opportunities for crop and livestock producers in these areas.
The Kansas City District includes the western portion of Missouri, Kansas, Nebraska, Oklahoma, Wyoming, Colorado, and northern New Mexico.