Corn Belt ag economic conditions subdued

CHICAGO — Agricultural conditions varied in tandem with sporadic droughts across the Federal Reserve districts, but concerns over crop price declines were common in all corners of the Corn Belt.

The Federal Reserve's Beige Book, released July 17, provides a survey-based summary of economic conditions from mid-May through early July across 12 districts.

Published eight times per year, information for the Beige Book is collected through reports from bank and branch directors, plus interviews and online questionnaires completed by businesses, community organizations, economists, market experts and other sources.

Here is what the Corn Belt districts reported regarding the agricultural conditions.

Chicago

"Farm income expectations for the district waned in late May and June as key crop prices declined. Contacts indicated that farmers were slow to sell crops from storage and were holding back on selling ahead from their anticipated fall harvest in part because of low prices," the report noted.

Although recent flooding covered some acres, corn and soybean planting recovered from earlier weather-related challenges across much of the district, and overall crop conditions were off to a better start than in recent years.

Corn, soybean and wheat prices were lower, with a strong wheat harvest already underway.

A contact noted that an early wheat harvest would free up fields for second-crop soybeans sooner than usual, allowing the soybeans to mature for longer.

Milk and egg prices were higher, while hog prices faltered. Cattle prices were flat at a high level.

The Seventh Federal Reserve District of Chicago includes the northern two-thirds of Illinois and Indiana, all of Iowa, the southern two-thirds of Wisconsin and Michigan's Lower Peninsula.

St. Louis

"Overall agriculture conditions have remained stable since our previous report. The share of major district crops of soy, rice, corn and cotton rated fair or better declined slightly in every state except Tennessee, where the share remained the same," according to the report.

Despite extreme high heat, soil conditions have improved relative to the drought conditions observed last growing season.

District contacts reported that rains earlier in the year have helped protect against high temperatures, but high temperatures remain a concern.

Contacts in agriculture equipment and services stated that the slowdown in transactions relative to their peak in 2021-2022 has continued.

The St. Louis-based Eighth Federal Reserve District includes the southern parts of Illinois and Indiana and eastern half of Missouri, as well as parts of Tennessee, Arkansas, Kentucky and Mississippi.

Minneapolis

District agricultural conditions weakened since the last report.

Lenders responding to an agricultural credit conditions survey overwhelmingly reported decreased farm incomes in the second quarter of 2024 relative to a year earlier, with expectations for further declines in the coming three months.

Poultry producers were concerned about an avian influenza outbreak in the region.

While ample precipitation was welcomed in some areas previously affected by drought, other areas were experiencing catastrophic flooding or delayed planting due to excess moisture.

The Minneapolis-based Ninth Federal Reserve District includes all of Minnesota, the Dakotas and Montana, the northern one-third of Wisconsin and Michigan's Upper Peninsula.

Kansas City

Agricultural economic conditions in the Tenth Federal Reserve District remained subdued alongside weak crop prices.

The latest planting estimates and favorable growing conditions suggested corn and soybean production could be strong, factors likely to weigh on prices.

Grain stocks from last year also remained elevated within district states and across the United States, putting additional downward pressure on prices and reducing revenue opportunities.

Cattle prices remained strong and continued to support favorable profit opportunities for cow/calf producers.

"Contacts throughout the region reported some deterioration in financial conditions for farm borrowers that was more pronounced in areas more heavily reliant on crop revenues and less concentrated in cattle production," according to the summary.

"In addition, elevated production costs, interest expenses and farm household expenditures remained primary concerns for many agricultural lenders."

The Kansas City district includes the western part of Missouri, Kansas, Nebraska, Oklahoma, Wyoming, Colorado and the northern New Mexico.