On Wednesday, the Federal Reserve released its February 2023 Beige Book Update. This is a summary of commentary on the current economic situation by the Federal Reserve Districts. The report included several observations about the US agricultural economy.
* District 6- Atlanta- “Agricultural conditions remain the same. mixture. demand beef There has been an increase, especially for calves, following the downsizing of Texas cattle herds during the recent drought.demand milk Exports of powdered milk to China decreased, and demand for dairy products decreased. butter dropped from high levels. cotton Demand remains sluggish.Florida in production citrus fruit Sales were limited due to tree damage, but demand remained strong.
Bird flu continued to limit the supply of eggs commonly sold domestically, driving up prices.
“But bird flu-related restrictions export As global demand for poultry meat softened significantly, Increased domestic supplypoultry company reported suffer losses amid high costs and falling prices“
* District 7 – Chicago – “Contacts’ 2023 forecast for rural farm income was above the 2022 average, while most yielded near-average earnings.Wheat prices rose, partly because of longer Russian inspections on grain shipments from Ukraine and longer inspections by buyers. reluctant Conclude a purchase contract, taking into account the uncertainty as to whether a shipping transaction with Russia will take place will continueCorn and soybean prices are also rising, south america harvest.
“Contacts noted that cost reductions for some inputs help farmers’ incomes, but rising feed costs are a continuing concern for livestock producers. Egg prices have fallen from very high levelsand dairy prices were generally low.
There have been reports of small dairy operations closing. Scaling to a more profitable scale was costly, as interest rates on loans were higher.
“Beef and pig prices increased during the reporting period.”
* District 8 – St. Louis –”Agricultural conditions in the region are moderately lowered Since my last report. Acres of winter wheat planted in the district increased by 27% this season compared to this period a year ago. These increases range from 15% to 55% across the district states. The only exception for Arkansas, a moderate decrease of 14% was seen.District contact information is no longer optimistic On the outlook for the rest of the year, Concerns about rising input costs, especially labor. In addition, contacts noted that sales were in line with or below expectations, with some expressing concerns such as: Rising interest rates put additional strain on the balance sheet“
* District 9 – Minneapolis– “Regional agricultural conditions stay strong towards the end of winter. The Minneapolis Fed’s fourth-quarter (January) Farm Credit Survey found that nearly three-quarters of his lenders reported he had an increase in farm income between October and December compared to the same period last year. doing. Farmers’ household spending, capital expenditures and loan repayment rates also increased in a balanced fashion, reducing demand for loans. “
* District 10 -Kansas City- “Agricultural Economy in the Tenth District stay strongbut Risks to outlook lingeredIn the livestock sector, cattle prices rose slightly in February to reach multi-year highs along with lower inventories. In the crop sector Corn, soybeans and wheat prices remain high and continued to support Profitability.
Despite strong market conditions, district contacts said rising production costs, rising interest rates and ongoing drought in some areas are putting downward pressure on profit margins for many producers. reporting.
“Cost pressures have been particularly difficult for livestock businesses, with several reports suggesting that Early calf sales and herd liquidation as a result of severe drought and expensive Due to the cost of feed, there is a possibility that future earnings will decrease. “
* District 11 – Dallas – “agricultural conditions slightly improved over the reporting period. Drought conditions persisted for most of the district, winter wheat I felt better this year than last year. Spring furrow crop planting is imminent, and he expects cereal planting area to increase and cotton planting area to decrease in 2023. The price of agricultural products is relatively high, There was some improvement in input costs, especially fertilizers. While cattle prices rose amid robust beef demand, Egg prices are falling after soaring early in the year“
* District 12 – San Francisco– “Situation of agricultural and resource sectors softened a littleInternational transport bottlenecks have eased further, but demand from overseas continues to grow. strong dollarOne contact observed that producers continued to shift sales to the domestic market, while another commented that domestic demand was high enough to absorb most of the available supply. However, demand for produce from retailers and food service providers has reportedly stabilized or declined in recent weeks. Contacts continued to report low yields due to droughtan Alaska contact noted that some key seafood stocks remained stable. Input costlabor, energy, water, fertilizer, etc. gainone contact in the Pacific Northwest noted that food transportation costs have dropped significantly.