Agriculture Economy Remains Weak According to Federal Reserve

(KANSAS CITY, MO) The Tenth District farm economy remained weak, and commodity prices declined in response to supply expectations and trade uncertainty according to the latest Federal Reserve Beige Book released last week. The Kansas City Fed’s regional contacts reported weak farm income in the most recent survey period but expected slower deterioration in the coming months. Less pessimistic expectations in the second quarter were supported by increases in crop prices earlier in the year. However, sharp declines in crop and livestock prices in August weighed on-farm revenues. Hog and soybean prices declined moderately alongside ongoing trade disputes, and cattle prices decreased sharply following a substantial disruption at a major beef processing facility located in the District. Corn and wheat prices also declined sharply following higher-than-anticipated production estimates. The Dallas Fed reported that higher temperatures and a lack of rainfall negatively impacted the agriculture sector over the past six weeks, with drought conditions creeping back into parts of the district. Dryland grain crops were largely well established before weather conditions deteriorated, so solid yields were expected. Irrigated crops planted later in the growing season were feeling more of the negative impact of the weather. Most agricultural commodity prices moved down over the reporting period, prompting some pessimism among agricultural producers.