Ag Bankers Believe Market Stabilization Could Be Near

KANSAS CITY, MO – The Federal Reserve released its latest Beige Book, and according to the Kansas City Federal Reserve Bank, the Tenth District farm economy remained weak despite some signs of stabilization in markets for key agricultural commodities.

By late June, all U.S. meatpacking plants were operational, but COVID-19 continued to impede supply chain functions. Capacity utilization and meat production at packing plants increased slightly since May but appeared to remain limited somewhat by modified operations.

Alongside production constraints, demand for meat was expected to decrease in 2020 as a result of broader economic weaknesses, putting additional downward pressure on cattle and hog prices. Ethanol production rebounded slightly in June, but remained about 20 percent lower than a year ago and continued to weigh on corn prices.

District contacts reported that farm borrower liquidity weakened considerably alongside lower commodity prices, but government aid programs could provide a moderate degree of support to agricultural credit conditions.
(SOURCE: Federal Reserve Bank Beige Book)