On Wednesday, the Federal Reserve Board launched its November 2022 Beige Book update, a abstract of commentary on present financial situations by Federal Reserve District. The report included a number of observations pertaining to the U.S. agricultural financial system.
* Sixth District- Atlanta– “Agricultural situations remained combined. Cotton growers reported additional softening of demand from textile producers. Tariffs imposed on rice from India saved demand for home rice robust. Demand for hen and cattle exceeded provide. In Florida, Hurricane Ian destroyed a number of herds of livestock and quite a few crops, and citrus business contacts count on harm to timber from the storm will exacerbate already strained manufacturing from illness within the coming years.”
* Seventh District- Chicago– “General, expectations for District agricultural earnings in 2022 rose a bit, reflecting the robust corn and soybean harvests. Regardless of pockets of poor yields from drought, District corn and soybean yields had been near the data set in 2021.
Barge shipments continued to be constrained as a result of low water ranges on the Mississippi, pushing up transport prices, limiting exports, and lowering the provision of chemical compounds and fertilizers. The prices of most inputs remained elevated.
“Corn costs had been decrease, whereas soybean costs moved greater. Dairy and hog costs had been typically down, although egg and cattle costs had been up.”
* Eighth District- St. Louis– “District agriculture situations have remained unchanged in contrast with the earlier reporting interval. Manufacturing forecasts for corn and cotton have elevated barely, whereas forecasts for soybeans remained unchanged and rice declined. On a year-over-year foundation, nevertheless, manufacturing ranges for cotton and soybeans are anticipated to be barely greater, whereas corn manufacturing is predicted to barely decline and rice manufacturing is predicted to reasonably decline. Whereas manufacturing has remained comparatively regular, contacts within the District stay involved over rising enter costs, particularly fertilizers and feed.”
* Ninth District- Minneapolis– “District agricultural situations remained robust via harvest season. In response to the Minneapolis Fed’s October agricultural credit score situations survey, practically three-quarters of lenders reported farm incomes elevated from July via September in contrast with the identical interval a 12 months earlier.
Farm family spending, capital spending, and mortgage reimbursement charges additionally elevated on stability, whereas demand for loans fell.
“Nevertheless, cattle ranchers in Montana reported culling herds as a result of excessive feed prices and lack of accessible hay within the drought-stricken state, and had been reportedly lowering their deliberate capital expenditures for 2023.”
* Tenth District- Kansas Metropolis– “The Tenth District farm financial system typically remained robust regardless of barely decrease commodity costs and intensifying opposed results of drought in sure areas of the District.
General, farm earnings and credit score situations continued to enhance modestly.
“Nevertheless, contacts in areas most impacted by drought reported that farm earnings and liquidity had been barely decrease than a 12 months in the past. As harvest neared completion, crop yields had been typically anticipated to be lower than common throughout all states and had been significantly poor in Kansas and Oklahoma. Dry situations additionally decreased hay manufacturing all through the area and is prone to push feed bills greater for a lot of livestock producers.”
* Eleventh District- Dallas– “Widespread rainfall considerably improved pasture and soil moisture situations, although a majority of the district stays in drought. Agricultural commodity costs remained robust, although contacts mentioned unprecedented volatility in cotton markets in addition to a comparatively low cotton value in contrast with grain costs could immediate a big drop in cotton acreage subsequent 12 months. Beef demand remained robust, and costs had been up from six weeks in the past however down from a 12 months in the past due to elevated beef provide as a result of extra animals transferring to slaughter amid the drought this 12 months.”
* Twelfth District- San Francisco– “Situations within the agriculture and resource-related sectors had been steady, albeit weak, throughout the reporting interval. Farmers reported stable home and worldwide demand for each contemporary and processed meals, particularly for dairy merchandise and nuts, however famous that world financial uncertainty and a robust greenback continued to weigh down international demand for many home agricultural merchandise. Restricted rainfall all through California has reportedly impacted summer time crops, resembling tomatoes, and is threatening expectations for numerous winter crops, particularly leafy greens. Contacts reported significant aid in provide bottlenecks in current weeks, though one producer famous persistent disruptions and delays at some ports in Asia stemming from pandemic containment measures.”