Agricultural Economy

Last week, the USDA’s Economic Research Service (ERS) released its annual report exploring characteristics of U.S. farms: “America’s Diverse Family Farms: 2020 Edition.”  Today’s update includes highlights from the report, which was written by Christine Whitt, Jessica E. Todd, and James M. MacDonald.

Wall Street Journal writer Lucy Craymer reported late last week that, “La Niña is shaking up agriculture in an already-tumultuous year for commodity markets.”

Donnelle Eller reported on the front page of Friday’s Des Moines Register that, “Mid-Iowa Cooperative’s Mike Kinley sees a $275 million soybean processing plant under construction in eastern Iowa as a way for farmers to get more money for the crops they grow.”

On Wednesday, the Federal Reserve Board released its November 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 $36.0 billion (43.1 percent) from 2019 to $119.6 billion in 2020.”

Bloomberg writer Dominic Carey reported earlier this month that, “U.S. red-meat production surged to a record in October, months after the coronavirus disrupted slaughterhouses.”

Wall Street Journal writers Ryan Dezember and Kirk Maltais reported last week that, “Dry weather, China’s push to fatten its pigs and the lockdown-induced baking bonanza are lifting prices for U.S. row crops.”

A news release this week from the American Bankers Association (ABA) stated that, “As the farm economy continues to work through a prolonged downturn in the midst of an unparalleled, global economic dislocation, ag lenders remain focused on credit quality, according to the Fall 2020 Agricultural Lender Survey report produced jointly by the [ABA] and the Federal Agricultural Mortgage Corporation, more commonly known as Farmer Mac.”

Last week, the Federal Reserve Banks of Chicago, Kansas City and Minneapolis released updates regarding farm income, farmland values and agricultural credit conditions from the third quarter of 2020.

Brazil is expected to produce a record grain crop in 2020/2021, despite the drought that affected planting in some regions. On Tuesday, the National Supply Company (Conab) projected 268.9 million tons of grain production, 4.6% more than 2019/2020.

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.”