Agricultural Economy

A recent report from USDA’s Foreign Agricultural Service (FAS) stated that, “Brazil is forecast to overtake the United States as the leading soybean producer in the world during the 2019/20 season.”

News articles continue to point to various market disruptions caused by the ongoing African Swine Fever outbreak in Asia and beyond.  Today’s update looks at a few of these items in more detail.

A news release Wednesday from the Center for Agricultural and Rural Development at Iowa State University and Iowa State University Extension and Outreach indicated that, “It’s been a difficult year for farmers—the planting season saw an overabundance of rain and delayed planting, the United States’ trade war with China persisted, skewing both commodity prices and demand, and farm bankruptcies rose to the highest level since 2011. However, favorable interest rates, strong yields, and limited land supply combined to help drive Iowa’s farmland values up for only the second time in six years.”

Bloomberg News reported last week that, “China’s hog population has stopped shrinking and is starting to rise, after months of decline because of African swine fever, and the recovery should keep pork prices in check, a senior agriculture ministry official said.”

The USDA’s Economic Research Service (ERS) indicated on Wednesday that, “Net farm income, a broad measure of profits, is forecast to increase $8.5 billion (10.2 percent) from 2018 to $92.5 billion in 2019. Net cash farm income is forecast to increase $15.5 billion (15.0 percent) to $119.0 billion.”

Last week, the Federal Reserve Board released its November 2019 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.

Earlier this month, in its monthly Livestock, Dairy and Poultry Outlook, USDA’s Economic Research Service (ERS) explained that, “U.S. trade data through September indicate that in the first three quarters of 2019 total exports of red meat and poultry increased 1.1 percent. However, driven by a large increase in expected fourth-quarter shipments, exports for the year are forecast to increase more than 3 percent compared with 2018, followed by an increase in 2020 of about 7 percent.”

DTN writer Russ Quinn reported on Friday that, “As if the 2019 growing season didn’t have enough weather challenges, corn harvest has come to a complete halt for some farmers as propane for crop drying has been hard to secure. Increased demand nationwide due to extremely cold weather is limiting supplies available for drying crops.”

Last week, the Federal Reserve Banks of Chicago, St. Louis, Kansas City and Minneapolis released updates regarding farm income, farmland values and agricultural credit conditions from the third quarter of 2019.  And earlier this year, the Federal Reserve Bank of Dallas released its Agricultural Survey for the third quarter of 2019.  Today’s update highlights core findings from the Fed reports.

Grace Zaplatynsky reported on Friday at the Globe Gazette (Mason City, Iowa) Online that, “This year has not been the greatest year for farmers with the soaked spring and now the cold and early snow in fall.”

Bloomberg News reported last week that, “Tang Jie, who works on a pig farm, says he used to get pork from the wet market near his home every day. But he hasn’t bought any in two months. And his favorite dish, stewed pork ribs with lotus root, has been cut from the menu at his local restaurant.”

Late last month, Des Moines Register writer Donnelle Eller reported that, “Rain has slowed the harvest across the state in recent days. National Weather Service data for Des Moines showed that central Iowa on [October 23rd] matched the October rainfall record of 7.29 inches, set in 1941. Any more rain in the remaining eight days of the month would set a new record — a landmark in a year that already is one of the wettest in recorded Iowa history.”

Last week, the USDA’s Economic Research Service (ERS) released a report discussing the USDA’s baseline, while the USDA’s Office of the Chief Economist (OCE) released selected tables from the Department’s Agricultural Projections to 2029. Today’s update highlights aspects from both the ERS report, and the OCE projections that focused on soybeans and corn.

In an update last week from the Federal Reserve Bank of Kansas City (“Farm Lending Slows but Remains High”) Cortney Cowley and Ty Kreitman stated that, “Growth in farm lending activity slowed in the third quarter of 2019;” but, “Despite a slowdown in the pace of debt accumulation, weaknesses in the sector persisted, continuing to pressure farm cash flows and agricultural credit conditions.”

On Wednesday, the Federal Reserve Board released its October 2019 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.

Late last week, Bloomberg writers Brian K Sullivan and Ashley Robinson reported that, “A large snowfall is set to sweep out of the Rocky Mountains later this week, bringing snow by the foot across the Dakotas, slowing wheat harvests and ending any chance for still-maturing corn crops to flourish.”

Last week, the Federal Reserve Board released its August 2019 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 Friday that, “Net farm income, a broad measure of profits, is forecast to increase $4.0 billion (4.8 percent) from 2018 to $88.0 billion in 2019. Net cash farm income is forecast to increase $7.6 billion (7.3 percent) to $112.6 billion.”

Wall Street Journal writer Lauren Silva Laughlin reported earlier this month that, “Losses are popping up in farmers’ income statements and the pain can be seen in the share prices of the companies that depend on them. After a challenging planting season due to wet weather, trade uncertainty has ravaged farm profitability. Flooding throughout the spring caused what JPMorgan Chase deemed a ‘planting season from hell.'”

On Thursday, the Federal Reserve Bank of Chicago released a report providing an outlook on farmland values and agricultural credit conditions for the second quarter of 2019.  Recall that other Federal Reserve Districts released similar reports last week.  A summary of Federal Reserve District agricultural land value and credit reports from the first quarter of 2019 can be found here.  Meanwhile, recent updates from USDA’s National Agricultural Statistics Service and Purdue University have also provided additional perspective on farmland values.