Agricultural Economy

The USDA’s Economic Research Service (ERS) indicated on Wednesday that, “Net farm income, a broad measure of profits, is forecast to increase by $22.0 billion (23.2 percent) from 2020 to $116.8 billion in 2021. This expected increase follows a forecast increase of $15.7 billion (19.9 percent) in 2020.”

Last week, Reuters writer Rod Nickel reported that, “A global shortage of nitrogen fertilizer is driving prices to record levels, prompting North America’s farmers to delay purchases and raising the risk of a spring scramble to apply the crop nutrient before planting season.”

In an update last week from the Federal Reserve Bank of Kansas City, “Farm Real Estate Values Rise Sharply,” Nathan Kauffman and Ty Kreitman stated that, “Farmland values surged in the third quarter according to Federal Reserve Surveys of Agricultural Credit Conditions.”

Bloomberg writer Elizabeth Elkin reported on Friday that, “World fertilizer prices continue to soar as tightening supplies send costs up for farmers and consumers across the globe.”

In an article last week from the Federal Reserve Bank of Minneapolis, “Even with severe drought and supply chain woes, farms remain in good financial shape,” Joe Mahon pointed out that, “A year into a tenuous recovery in agriculture driven as much by government support as by market conditions, widespread and severe drought could be expected to be a major setback.”

On Monday, the Federal Reserve Banks of Chicago and Kansas City released updates regarding farm income, farmland values and agricultural credit conditions from the third quarter of 2021.

Last week, DTN writer Katie Micik Dehlinger reported that, “The average retail price of anhydrous set a record this week at $1,113/ton after increasing 38% from last month.”

In its November Wheat Outlook report on Friday, the USDA’s Economic Research Service (ERS) indicated that, “The 2021/22 Season-Average Farm Price (SAFP) is raised 20 cents per bushel to $6.90 based on the continued strong farmgate prices as reported in the October 29 National Agricultural Statistics Service (NASS) Agricultural Prices report as well as rising futures and cash prices.”

Bloomberg writer Megan Durisin reported last week that, “Global food costs jumped last month, extending a march toward a record and piling more inflationary pressure on consumers and governments.”

Late last week, Bloomberg writer Elizabeth Elkin reported that, “A gauge of North American fertilizer prices touched a new record high, driving up costs for farmers who are already experiencing tight margins and threatening to make food even more expensive.”

Reuters writer Julie Ingwersen reported last week that, “U.S. farmers are likely to reduce plantings of corn while expanding seedings of soybeans and wheat for the upcoming marketing year, the U.S. Agriculture Department said on Friday.”

DTN writer Katie Micik Dehlinger reported on Wednesday that, “The retail fertilizer price spike continues, with seven of the eight major fertilizers tracked by DTN posting significant gains and one setting a new record. UAN32 cost an average of $522 per ton in the fourth week of October, the highest in DTN’s 13 years of gathering bids.”

Wall Street Journal writer Jaewon Kang reported earlier this week that, “Supermarket chains are revamping their operations to navigate persistent product shortages, expanding storage space and curbing discounts to make sure they don’t run out.”

In its October Wheat Outlook report, the USDA’s Economic Research Service (ERS) pointed out that, “USDA’s National Agricultural Statistics Service (NASS) published its Grain Stocks report on September 30, which indicated that wheat stocks as of September 1 this year were the lowest for that date since 2007.”

Earlier this week, Wall Street Journal writer Jinjoo Lee reported that, “High natural-gas prices today mean your electricity and heating bills will likely be expensive this winter. Next year, it could mean you will end up paying more to eat and to fill up your car.”

A news release on Monday from ADM indicated that, “ADM, a global leader in nutrition and agricultural origination and processing, and Gevo, Inc., a pioneer in transforming renewable energy into low carbon, energy-dense liquid hydrocarbons, announced today that they have signed a memorandum of understanding (MoU) to support the production of sustainable aviation fuel (SAF) and other low carbon-footprint hydrocarbon fuels.”

In an update from the Federal Reserve Bank of Kansas City earlier this month (“Larger Livestock Loans Boost Farm Lending”), Nathan Kauffman and Ty Kreitman stated that, “Demand for livestock loans grew in the third quarter, boosting agricultural lending activity at commercial banks.”

Bloomberg writers Kim Chipman and Elizabeth Elkin reported late last week that, “Skyrocketing fertilizer prices could lead U.S. corn profits to drop by about a quarter next year, potentially motivating farmers to shift millions of acres into less cost-intensive soybeans.” 

On Wednesday, the Federal Reserve Board released its October 2021 Beige Book update, a summary of commentary on current economic conditions by Federal Reserve District. The report included several observations pertaining to the U.S. agricultural economy.

Bloomberg writers Brendan Case, Leslie Patton, and Kim Chipman reported this week that, “In Denver, public-school children are facing shortages of milk. In Chicago, a local market is running short of canned goods and boxed items.”