Agricultural Economy

Recent news items discuss the ongoing impacts of the unprecedented adverse weather that unfolded in the Corn Belt this spring.  Corn prices have increased as supply uncertainty persists.  Meanwhile, commodity export demand remains a concern as the U.S., China trade spat continues.  Today’s update looks at some of these issues in more detail.

The most recent crop forecast from the U.S. Department of Agriculture revealed that unprecedented spring weather has already negatively impacted production prospects for corn.  Meanwhile, recent news items highlight the ongoing production uncertainty that stems from later than normal planting.  The sluggish pace of corn and soybean crop development, along with planted acreage uncertainty, is also clouding the production forecast.

Financial Times writers Gregory Meyer and Robert Armstrong reported earlier this month that, “Despite a half-decade of falling grain prices, Midwestern farmland has held much of its value, and has become the foundation for a borrowing boom. Farm debt across the US has risen to $427bn, close to amounts that preceded the 1980s agricultural crash, when adjusted for inflation.”

Earlier this month, the Federal Reserve Board released its May 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.

A news release from the U.S. Department of Agriculture on Monday provided additional details regarding disaster aid and trade-related assistance for farmers this year.

Washington Post writers Andrew Van Dam, Laris Karklis and Tim Meko reported on Tuesday that, “Corn Belt farmers are used to being at the mercy of the weather. But they are not used to the weather being quite this merciless.”

Farmers continue to cope with difficult planting conditions that have bogged down corn planting this spring to a record slow pace.  Policy uncertainty stemming from recently announced executive branch trade assistance persists, and the House of Representatives has been stymied in its effort to pass a disaster relief bill.  Today’s update discusses these issues in more detail.

Unrelenting rainfall continues to cause headaches for Corn Belt farmers.  Record-breaking precipitation this year has lead to flooding and historic delays in the pace of U.S. corn planting.  Soybean planting has also fallen significantly behind the five year average.  Today’s update recaps recent news articles and government reports that discuss these issues in more detail.

Ongoing wet weather in the Corn Belt, along with uncertainty associated with recent executive and legislative branch policy related actions, have converged on U.S. farmers as planting deadlines loom.  With June just days away, producers are sorting though both known, and significant unknown variables, in an effort to figure out how to maximize returns on their operations. Today’s update highlights some of these issues in more detail.

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

On Thursday, the House Agriculture Subcommittee on General Farm Commodities and Risk Management held a hearing titled, “Reviewing the State of the Farm Economy.” Today’s updates provides a brief recap of some of the issues that were discussed at the Subcommittee meeting.

An update last month from the Federal Reserve Bank of Kansas City (“Ag Banks Make Adjustments as Lending Remains Elevated,” by Cortney Cowley and Ty Kreitman) stated that, “According to the National Survey of Terms of Lending to Farmers, non-real estate lending continued to increase at a moderate pace in the first quarter. The volume of non-real estate loans increased 9 percent from a year ago. Although the volume of loans to finance operating expenses remained relatively steady, volumes for livestock loans and loans to finance machinery and equipment increased.”

Last week, the American Bankers Association (ABA) released its annual Farm Bank Performance Report.  Today’s update includes several highlights from the ABA update.

On Wednesday, the Federal Reserve Board released its April 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.

Recent news items from the Corn Belt point to several economic challenges facing producers as spring planting approaches.  Nonetheless, relatively steady farmland values continue to be a bright spot.  But a recent update from the Federal Reserve Bank of Kansas City noted that: “If farmland sales continue to increase in 2019 alongside persistently low agricultural commodity prices and higher interest rates, farmland values could decline further.”

A news release yesterday from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri indicated that, “Pressure on farm finances appears likely to continue according to the latest analysis of national and global agricultural trends from the University of Missouri. While the analysis shows a projected net farm income increase in 2019, farm income remains below the average of 2014-17. Longer-term projections suggest little change in real net farm income over the next decade, resulting in continued increases in the farm sector’s debt-to-asset ratio.”

On Tuesday, the House Appropriations Subcommittee on Agriculture held a hearing titled, “The Rural Economy.”  Today’s updates provides a brief recap of some of the issues that were discussed at the Subcommittee meeting.