Agricultural Economy

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

Recent news items have highlighted variables associated with the agricultural economy, including: loan repayment rates, debt levels, bankruptcy filings and agricultural production expenses.  Today’s update includes a brief recap of some of these articles and reports.

Nathan Kauffman and Ty Kreitman indicated in a recent update from the Federal Reserve Bank of Kansas City (“Large Loans Drive Further Increases in Farm Lending”) that, “Growth in the average size of farm operating loans boosted agricultural lending in the second quarter of 2019.”

On Wednesday, the Federal Reserve Board released its July 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 week, the Food and Agriculture Organization of the United Nations (FAO) released a report titled, “The State of Food Security and Nutrition in the World 2019.”  Today’s update includes highlights from the FAO report.

A news release on Monday from the Food and Agriculture Organization of the United Nations stated that, “Global demand for agricultural products is projected to grow by 15 percent over the coming decade, while agricultural productivity growth is expected to increase slightly faster, causing inflation-adjusted prices of the major agricultural commodities to remain at or below their current levels, according to an annual report by the Organisation for Economic Co-operation and Development and the UN’s Food and Agriculture Organization.”

The challenges presented by the extraordinarily bad weather this spring, which have already clouded the production outlook for 2019, continue to plague many farmers as the summer growing season unfolds across the Corn Belt.  Meanwhile, Saturday marked the one year anniversary of China’s imposition of tariffs on U.S. agricultural products.  Aid from the federal government has helped dull the tariff’s sting, but trade issues continue to linger for producers, with many concerned about the long-term impacts of the ongoing trade war.  Today’s update looks at recent news items that highlight these issues in more detail.

Bill Northey, the USDA Under Secretary for Farm Production and Conservation, was a guest on Friday’s “Adams on Agriculture” radio show with Mike Adams.  Today’s update highlights the parts of Friday’s discussion that focused on prevent plant acres and market facilitation program payments.

Today’s update highlights recent news items that discuss the value of farmland in Iowa, Nebraska, and more broadly in the Corn Belt.

Late last week, the U.S. Department of Agriculture’s Economic Research Service (ERS) released a report (“Interdependence of China, United States, and Brazil in Soybean Trade,” by Fred Gale, Constanza Valdes, and Mark Ash) that discussed “factors driving China’s imports of soybeans and production in Brazil and the United States, price dynamics, and market adjustments to China’s retaliatory tariff on U.S. soybeans.” Today’s update includes highlights from the ERS report.

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.