Observations on the Ag Economy- May 2021 • Farm Policy News

The Federal Reserve Board released its on Wednesday May 2021 beige book update, a summary of the Commentary on the Current Economic Condition of the Federal Reserve District. The report contained several comments on the US agricultural economy.

Diagram of the Fed districts from “The Beige Book”.

* Sixth District – Atlanta – “Agricultural conditions remained mixed. Widespread rainfall across much of the district resulted in unusually humid to excessively wet conditions, while the southern tip of Florida experienced unusually dry to moderate drought conditions. Most of the region’s cotton and peanut crops lagged the five-year average, while soybean crops were mixed and the corn crop in Tennessee was largely in line with the five-year average.

Contacts have reported some Challenges in the supply chain, including the ability to source materials and equipment, higher input costs, and greater labor availability.

“Several contacts found Land values ​​increased.

* Seventh District – Chicago – Farm income expectations strengthened in 2021 across sectors in April and early May. drought and dry weather conditions were a problem in a substantial part of the district, although timely rainfall could still remove most of the impact. frost damaged some plants and trees, with potentially severe losses for fruit producers. Corn and soybean growing went faster than normal. Corn, Soybean, and wheat prices have risen and were close multi-year highs. pig, Livestock and milk prices rose, supported by strong meat and milk exports. However, egg prices fell. Despite higher prices, the margins of the livestock owners could hardly be improved due to the higher feed costs.

Arable land values ​​rose again due to strong demand and limited stocks.

* Eighth Ward – St. Louis – Agricultural contacts remain generally optimistic about the current conditions. Most of the agricultural contacts surveyed stated that their sales have so far met expectations. Supply chain problems increase the cost of many producers, although higher commodity prices have helped generate higher incomes and maintain profit margins. One contact stated that government support in this sector was strong. The proportion of row crops planted has increased since the last reporting period and is slightly higher than at this point in time in 2020. Only Indiana is lagging behind their 2020 advances at this point. This optimism also applies to the outlook outlookas contacts reported that their outlook has improved somewhat for the remainder of 2021. “

* Ninth District – Minneapolis– “Agricultural conditions have improved a lot since the last report. Contacts expected strong agricultural income Beginning of the planting season, building on the recent raw material price increases and Export demand. Harvest progress in mid-May was generally well above the recent average in the district states. But extremely drought Conditions were distributed in parts of the district. “

* Tenth District – Kansas City –The 10th district’s agriculture remained strong, but the drought continued to affect all types of growers in the west of the region.

“The prices for corn, soybeans, wheat, cotton and pigs have risen in the last few weeks and persisted at a multi-year high until the beginning of May. In contrast, the outlook for that Livestock farming remained subdued as cattle prices were close to pre-pandemic levels but chances of winning were limited due to increased feed costs. In addition to severe drought in the western part of the district, the wheat harvest in Colorado was in poorer condition compared to other states. Contacts also reported that the effects of drought on pasture quality and hay production deteriorated further. “

* Eleventh District – Dallas – “Recent rains alleviated drought Conditions in parts of the district and improved prospects for row crops. Agricultural commodity prices have risen across the board, spurred on by the scarce world supply and robust export demand. Overall, the row crop farmers were optimistic for improved production and sales this year. However, significantly higher grain prices have had a negative impact on the livestock sector, with feed costs twice as high as a year ago. Beef exports were strongwhich, along with persistent capacity bottlenecks in meat packaging plants Beef prices driven well above average. “

* Twelfth District – San Francisco– “Conditions in the agricultural and raw materials sector clearly improved. Relaxed capacity restrictions in restaurants and pubs contributed to increased demand for agricultural products such as wheat, corn, nuts and fruits. The demand from abroad also increased, supported by the depreciating dollar later in the period. As a result, it was found that stocks of fruits and nuts have decreased to a lower level than usual.

However, supply chain disruptions continued to negatively affect many manufacturers, with one reporting both domestic and international logistical problems that resulted in significant delays in seafood sales.

“Breeders in California found that current drought Conditions are expected to negatively impact the annual harvest this year, driving up labor and electricity costs as farmers rely more on wells and water pumps for irrigation. “

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