Southwestern Bankers Report Challenging Cotton and Wheat Conditions

DALLAS, TX – Hot and dry weather continued across most of the District, with some parts of Texas entering severe to extreme drought. As a result, crop and pasture conditions deteriorated over the reporting period, though the harvest was already well underway for row crops. According to the most recent Federal Reserve’s Beige Book, yields were favorable for much of the 2019 corn and sorghum crop, which at current crop prices has allowed many producers to cover their costs. Wheat and cotton yields were good but prices were below break-even levels. Bankers in the district report a bearish outlook for cotton prices as export and domestic demand estimates are being cut due to slower economic growth, and supply estimates are not being cut as much as anticipated. Trade issues were still very prominent on the minds of agricultural producers, however, some contacts reported more optimism regarding a resolution.