CHICAGO -- Trade deal potentials bolstered agricultural outlooks, but conditions remained unchanged across Federal Reserve Districts in the latest banking industry survey.
The Federal Reserve System's Beige Book report released Jan. 15 includes survey information collected on or before Jan. 6 across the nation's 12 districts.
It characterizes regional economic conditions and prospects based on a variety of mostly qualitative information, gathered directly from district sources.
"The prospects of a trade deal with China created some optimism in the farm sector. One contact called the potential deal a 'key market driver,'" according to the Seventh Federal Reserve District of Chicago survey, which includes the northern two-thirds of Illinois and Indiana and all of Iowa, Wisconsin and Michigan.
"The final results for the 2019 harvest varied from average to well below normal across the district, yet they were better than had been expected in light of poor weather during both planting and harvesting. Corn and soybean prices moved higher, with both prices above year-ago levels. That said, lower-than-usual corn quality and higher-than-usual drying costs cut into crop farmers' profits.
"Overall, with extra government payments boosting farm income, the district's agricultural sector was in about the same financial shape as it was a year ago. Increases in milk and cattle prices provided a boost to dairy and livestock producers."
The Eighth Federal Reserve District of St. Louis reported that agriculture conditions remain unchanged from the previous reporting period. The percentage of winter wheat in the district rated fair or better remained approximately unchanged at 93% from the end of October to the end of November. This is roughly the same level of winter wheat rated fair or better at the end of 2018.
"Contacts reported that continued low crop prices and trade disputes have harmed the industry. Several reports indicated the federal assistance to farmers via the market facilitation program has helped farmers remain in business," the Eighth District report noted.
The district includes the southern parts of Illinois and Indiana and eastern half of Missouri, as well as parts of Tennessee, Arkansas, Kentucky and Mississippi.
"District agricultural conditions remained weak. Industry contacts reported that trade conflicts combined with poor weather put continued pressure on farm households, with federal aid payments and insurance the only source of relief for many producers," according to the Federal Reserve District of Minneapolis summary.
"One contact called 2019 'the mother of all disasters.' In contrast, a dairy industry source reported that the sector has begun to rebound, and producers were becoming more bullish; Montana wheat producers also had a strong year."
The Minneapolis district includes all of Minnesota, the Dakotas and Montana, northwestern Wisconsin and all of Michigan's Upper Peninsula.
The farm economy in the Federal Reserve District of Kansas City generally remained subdued despite a modest increase in agricultural commodity prices.
"The prices of most major crops increased moderately since the previous reporting period and crop production in the Tenth District was expected to be similar to a year ago, resulting in expectations of slightly higher revenues compared with the previous year. In the livestock sector, cattle prices also increased modestly in December and hog prices remained relatively stable, which could provide additional support. The slight increase in agricultural prices and revenues, however, was not expected to significantly improve the financial condition of producers in the district," the Kansas City report stated.
The Kansas City district includes the western part of Missouri, Kansas, Nebraska, Oklahoma, Wyoming, Colorado and the northern New Mexico.
Tom C. Doran can be reached at 815-780-7894 or [email protected]. Follow him on Twitter at: @AgNews_Doran.