Agriculture, the Fed is watching you!
The economists in the various Federal Reserve District Banks have provided plenty of fodder for deliberation, extending from challenging economic times for farmers to very good economic times for farmers.
Their research is included in the “Beige Book” which reports the economic conditions of the banking districts, gathered by the Fed economists.
The Beige Book—so named for no other reason than the color of its cover—does not really reflect what the Fed’s economists and policy setters think; but only the information prepared for their deliberations.
It ranges from agriculture and manufacturing to housing and natural resources, as well as commercial activity and tourism.
The following reports are from the various district banks within the Federal Reserve:
The agricultural sector remained strong, while energy production declined slightly. Results of our most recent agricultural survey indicated that farmland values were above both the previous quarter and year-ago levels. In addition, most contacts noted that 2012 was one of the best years that farmers have ever had; they indicated that higher commodity prices had resulted in stronger cash positions. Several forestry contacts reported a pickup in lumber prices due to the uptick in the housing sector.
SIXTH DISTRICT – ATLANTA
Recent rains improved drought conditions in Alabama and Georgia, while Florida saw dry conditions expand over most of the state. Prices for corn, soybeans, beef, broilers, and eggs were higher than year-ago levels while the price for cotton was down. Contacts continued to report that groups with no agriculture experience were looking to buy farmland as they seek better investment returns.
Snow and rain continued to boost topsoil moisture levels, although depleted subsurface moisture remained a concern for farmers. Between engineering work on the Mississippi River, higher water levels, and low export demand for grain, congestion eased for barge activity. Corn and soybean stocks at grain elevators were even tighter than last year, as many farmers continued to store a share of their crops on hand in anticipation of higher profits closer to harvest this year. Input costs for planting have not changed substantially over the winter. Corn, wheat, milk, hog, and cattle prices dipped during the reporting period, while soybean prices moved a little higher. The prices for corn and soybeans in February become the benchmarks for potential compensation from crop revenue insurance plans; these prices were high enough to guarantee that insured crop operations will cover their production costs this year. Lower feed costs aided the cash flows of livestock operations. Lower corn prices also led to higher ethanol production.
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