Keith Good: Beige Book — Observations on Ag Economy

    The Federal Reserve Board has released its Summary of Commentary on Current Economic Conditions.

    Commonly referred to as the “Beige Book,” the report included the following observations with respect to the U.S. agricultural economy:

    Fifth District- Richmond- “Persistent cold temperatures and wet field conditions delayed planting of row crops and in some locations, limited days out in the fields. There were reports of slower small grain growth and some freeze damage to fruit trees. An agribusiness located in South Carolina reported that winter weather pushed back some of their harvesting timelines, although demand levels remained solid. Beef prices remained high and pork prices increased due to a virus currently being found in pigs. A contact reported that the spreading virus decreased the number of pigs available to farmers and reduced the number maturing to hogs.”

    Sixth District- Atlanta- “While sufficient rainfall left only small pockets of dry conditions in the District, some growers reported delaying spring planting due to too much precipitation. Florida’s citrus growers continued to seek ways to mitigate the effects of citrus greening and contacts were hopeful that new research funding included in the recently approved Farm Bill would help find a solution to this problem.”

    Seventh District- Chicago- “The slow arrival of spring-like weather delayed fieldwork. However, concerns about a delayed start to planting were muted, especially in Illinois and Indiana where 2013 crops performed well after being planted late. The mood among farmers improved as crop prices increased enough from winter lows that breakeven outcomes now seem possible. Hence, there has been more forward contracting of crops than a year ago to manage risk. Higher soybean prices still support a shift in planting intentions toward soybeans and away from corn, but not as much as earlier this year. Fertilizer costs decreased from a year ago, and seed costs were flat. The livestock sector moved further into the black, as milk, hog, and cattle prices increased. Given lower numbers of hogs and cattle available to market, animals were fed longer in order to gain additional weight. Although hog operations were still battling a virus that killed many piglets, there were signs that the worst had past.”

    Eighth District – St. Louis- “District farmers are expected to plant 1 million fewer acres of corn in 2014 (a decline of 4 percent) relative to 2013. In contrast, District farmers are expected to plant 570,000 and 511,000 more acres of soybeans and rice this year than in the previous year (an increase of 2 percent and 37.6 percent), respectively.”

    Tenth District- Kansas City- “Crop growing conditions remained dry in March, while livestock prices increased further since the last survey period. The winter wheat crop was in need of moisture and rated in mostly fair to poor condition. Spring fieldwork began, and District farmers followed national trends by intending to plant slightly more soybeans and less corn. With crop prices still lower than a year ago, farm operating loan demand rose this year as farmers financed a larger portion of crop input costs. However, global supply concerns supported strong exports, and crop prices rose to a six-month high during the reporting period. Low cow inventories kept feeder cattle prices elevated, and strong export demand supported higher fed cattle prices. In addition, hog prices surged as the on-going swine virus cut inventories further.”

    Eleventh District- Dallas- “District drought conditions continued to worsen in March, particularly in the Texas panhandle which is where much of the state’s cotton is grown. Winter wheat crop conditions deteriorated somewhat. Agricultural commodity prices rose over the reporting period, with across-the-board increases in crop prices and particularly strong gains in livestock prices. Beef prices rose to record highs in March in light of strong exports and stable domestic demand coupled with tight cattle supplies. Dairy demand boomed, especially exports, and prices for dairy products moved to record highs. According to respondents, the rise in prices has allowed all segments of the livestock industry to be profitable, an occurrence not all too common.”

    Twelfth District- San Francisco- “Demand for most agricultural and resource-related goods was largely stable, but the supply was somewhat constrained as several weather-related factors held back production. Demand was stable or up for assorted crop and livestock products and particularly robust for dairy items. However, storms in parts of the District disrupted transportation of winter vegetables. Contacts’ concerns about water costs and availability mounted, and limited water for irrigation contributed to decreased yields of annual crops, including tomatoes, greens, and onions, in California’s Central Valley. Water shortages led some farmers to reduce cattle herd sizes as well. Pork production fell as some hogs in the District contracted a fatal virus.”

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