Agricultural Economy

On Friday, the USDA’s Office of the Chief Economist released selected tables prepared for the Department’s upcoming Agricultural Baseline Projections report.

Soybean prices rose recently on the Chicago Mercantile Exchange, driven by the delay in planting the Brazilian crop, among other factors.  

In an update last week from the Federal Reserve Bank of Kansas City (“Ag Lending Update: Fewer Loans Issued to Farmers Limit Lending Activity”), Cortney Cowley and Ty Kreitman stated that, “Farm lending remained muted in the third quarter of 2020 but increased from last year according to the National Survey of Terms of Lending to Farmers.”

On Wednesday, the Federal Reserve Board released its October 2020 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.

Reuters writer Mark Weinraub reported late last week that, “U.S. corn and soybean supplies will be smaller than previously forecast, as adverse weather reduced the acreage that farmers will harvest, the U.S. government said on Friday.”

In an update late last month at the USDA blog, Robert Johansson, the Department’s Chief Economist, highlighted how the COVID-19 pandemic was adversely impacting the American farm economy.

Soybean planting, which promises to set a new record in Brazil, is underway in the Paraná, Mato Grosso do Sul, and Mato Grosso regions of the country.

The price of food has increased significantly in Brazil. The Broad Consumer Price Index (IPCA) rose 2.44% in 12 months, while food inflation rose 8.83%.  More specifically, the price of rice increased 19.2% in 2020, and soy oil rose 18.6%, in the same period.

On Wednesday, the Federal Reserve Board released its August 2020 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.

The USDA’s Economic Research Service (ERS) indicated on Wednesday that, “Net farm income, a broad measure of profits, is forecast to increase $19 billion (22.7 percent) from 2019 to $102.7 billion in 2020. Net cash farm income is forecast to increase $4.9 billion (4.5 percent) to $115.2 billion.”

Bloomberg writers Michael Hirtzer, Dominic Carey, and Kim Chipman reported last week that, “The corn crop in the U.S. Midwest deteriorated the most in 8 years with hot weather adding to woes from drought and the Aug. 10 derecho windstorm that swept through the top-growing state of Iowa.”

The Pantanal, the largest continental humid area on the planet, is facing the greatest environmental tragedy in decades.

Wall Street Journal writer Kirk Maltais reported on Saturday that, “Following a growing season last year filled with battering rainfall and bitter trade wars, U.S. farmers hoped 2020 would provide them an opportunity to make up some ground. Instead, the situation has grown worse for many as prices remain depressed.”

On Thursday, the Federal Reserve Banks of Chicago and Kansas City released updates regarding farm income, farmland values and agricultural credit conditions from the second quarter of 2020.

Reuters writer Tom Polansek reported on Friday that, “A storm packing hurricane-force winds on Monday impacted 37.7 million acres of farmland across the Midwest, including 14 million in Iowa, the Iowa Soybean Association said on Friday, citing estimates from the U.S. Department of Agriculture.”

Wall Street Journal writer Jesse Newman reported last week that, “More U.S. farmers are filing for bankruptcy, as federal payments projected to reach record levels this year fall short of compensating for the coronavirus pandemic and a yearslong slump in the agricultural economy.”

An unprecedented survey carried out by the Brazilian Agricultural Research Corporation (Embrapa) reveals the behavior around the use of digital solutions in the field in Brazil during of the Covid-19 pandemic.

The Argentine Ministry of Agriculture recently decreed a state of agricultural emergency after receiving an alert for a new locust cloud.  Currently, there are four monitored regions: Formosa, Chaco, Salta and Entre Ríos provinces.

In an update last week from the Federal Reserve Bank of Kansas City (“Agricultural Lending Consistently Slower”), Nathan Kauffman and Ty Kreitman stated that, “Agricultural financing activity slowed in the second quarter, according to the Survey of Terms of Lending to Farmers.”

A study published in the magazine Science caused a strong reaction from the Brazilian government last week. The publication shows that at least 17% of the meat and 20% of soybeans from the Amazon and the Cerrado that were exported to the European Union may have been produced in illegally deforested areas.