Federal Reserve contacts report that agricultural conditions have improved in recent weeks in the Midwest, but weakened across the Richmond, Atlanta, St. Louis, and Minneapolis Fed Districts. Weather disruptions are delaying crop plantings and commodity shipments. A deadly pig virus is impacting hog growers across the Richmond, Chicago, Kansas City, and San Francisco Districts. Prices of beef and pork rose.
Adverse weather is affecting several districts. Winter wheat is suffering due to dry conditions in the Kansas City District, and drought conditions continue to worsen in the Dallas Fed region. In contrast, wet field conditions are delaying planting in the Richmond and Atlanta Districts. Additionally, the Chicago Fed reports that the slow arrival of spring-like weather also is delaying fieldwork, although in some areas, crops perform well after late planting. The Minneapolis and San Francisco Feds report that winter weather disrupted transportation of some crops. Crop prices have increased in recent weeks but remain below year-ago levels across most of the country. Higher soybean prices have shifted planting intentions away from corn. Dairy demand is booming in the Dallas Fed region, especially for export, and prices for dairy products have hit record highs. Hog operations in a few Districts are battling porcine epidemic diarrhea virus, which is fatal to young pigs, and pork prices continue to rise. Beef prices have reached record highs.
Prepared by the Federal Reserve Bank of Richmond and based on information collected through April 7, the Beige Book summarizes comments received from businesses and other outside contacts.
The following is a Fed region-by-region summary of farm sector economic conditions, starting in the Mid-Atlantic and moving west:
Richmond – Persistent cold temperatures and wet field conditions have delayed row-crop planting in some locations. Contacts report slower small grain growth and some freeze damage to fruit trees. A South Carolina agribusiness reports that winter weather pushed back some of their harvesting timelines, although demand levels remain solid. Beef prices remain high and pork prices have risen due to the spread of porcine epidemic diarrhea virus. The virus appeared in the U.S. for the first time in April and has killed thousands of piglets. The disease is cutting into pork supplies and prompting some traders to wager that hog prices could set records this year.
Atlanta – Sufficient rainfall has left only small pockets of dry conditions across the six-state (Ala., Fla., Ga., La., Miss. and Tenn.) region, some growers have delayed spring planting due to too much precipitation. Florida’s citrus growers continue to seek ways to mitigate the effects of citrus greening and contacts are hopeful that new research funding included in the recently approved Farm Bill will help find a solution to this problem.
Chicago – The slow arrival of spring-like weather is delaying fieldwork. However, concerns about a late start to planting are muted, especially in Illinois and Indiana where 2013 crops performed well after being planted late. The mood among farmers improved as crop prices increased enough from winter lows that breakeven outcomes now seem possible. Hence, there has been more forward contracting of crops than a year ago to manage risk. Higher soybean prices still support a shift in planting intentions toward soybeans and away from corn, but not as much as earlier this year. Fertilizer costs are lower than a year ago, and seed costs are flat. The livestock sector moved further into the black, as milk, hog, and cattle prices increased. Given lower numbers of hogs and cattle available to market, animals were fed longer in order to gain additional weight. Although hog operations are still battling porcine epidemic diarrhea virus, but there are signs that the worst has past.
St. Louis – Farmers in the southern Midwest and northern Mid-South are expected to plant 4% fewer acres of corn this year. In contrast, District farmers are expected to plant 2% more acres of soybeans and 38% additional acres of rice this year than in the previous year.
Minneapolis – Agricultural conditions are mixed, with livestock and dairy producers performing well, and crop producers in worse shape. While crop prices increased slightly in March from the previous month, they remain significantly below the strong levels of recent years. March farm commodity prices fell from a year earlier for corn, wheat, soybeans and chickens; prices increased for cattle, hogs, milk, eggs and turkeys. A freight rail backlog is causing significant shipping delays for dry bean producers and will also likely delay getting the winter wheat harvest to market. District farmers intend to plant fewer acres of corn and significantly more acres of soybeans and wheat in 2014 compared with last year.
Kansas City – Crop growing conditions remained dry in March, while livestock prices increased further since the Feb. 24th survey period. The winter wheat crop is in need of moisture and rated in mostly fair to poor condition. Spring fieldwork has begun, and District farmers are following national trends by intending to plant slightly more soybeans and less corn. With crop prices still lower than a year ago, farm operating loan demand is up as farmers finance a larger portion of crop input costs. However, global supply concerns continue to support strong export prospects, and crop prices rose to a six-month high during the reporting period. Low cow inventories are keeping feeder cattle prices elevated, and strong export demand supports higher fed cattle prices. In addition, hog prices surged as the on-going swine virus cut inventories further.
Dallas – Drought conditions worsened in March, particularly in the Texas panhandle which is where much of the state’s cotton is grown. Winter wheat crop conditions deteriorated somewhat. Farm commodity prices rose over the reporting period, with across-the-board increases in crop prices and particularly strong gains in livestock prices. Beef prices rose to record highs in March in light of strong exports and stable domestic demand coupled with tight cattle supplies. Dairy demand boomed—especially exports—and prices for dairy products moved to record highs. The rise in prices has allowed all segments of the livestock industry to be profitable, an occurrence not all too common.
San Francisco – Demand for most agricultural goods is largely stable, but the supply was somewhat constrained as several weather-related factors crimp production. Demand was stable or up for crop and livestock products, and particularly robust for dairy items. However, storms in parts of the District disrupted transportation of winter vegetables. Contacts’ concerns about water costs and availability mounted, and limited water for irrigation contributed to decreased yields of annual crops, including tomatoes, greens, and onions, in California’s Central Valley. Water shortages led some farmers to reduce cattle herd sizes as well. Pork production fell as some hogs in the District contracted a fatal diarrhea virus. ■