Agriculture, the Fed is watching you!
EIGHTH DISTRICT—ST. LOUIS
Annual crop production in the District’s states declined for most crops in 2012. The District’s states produced less corn, cotton, soybeans, and wheat in 2012 compared with 2011; in contrast, the District’s states produced more rice and sorghum. The effect of the decline in production on farm incomes was partially offset by higher prices in the District’s states for corn, rice, sorghum, and soybeans. January coal production in the District’s states (excluding eastern Kentucky) was down 3.6 percent relative to a year ago.
Agricultural producers in the District remained in mostly strong condition. Despite the drought, the USDA reported that 2012 corn production broke records in Minnesota and North Dakota. South Dakota corn and soybean production were down from the previous year, but came in higher than earlier estimates. The Minnesota sugar beet and North Dakota soybean crops were the highest on record. Prices received by farmers in January increased from a year earlier for wheat, corn, soybeans, cattle, milk, eggs and poultry; prices for hogs, turkey and dry beans were below their year-earlier levels.
TENTH DISTRICT - KANSAS CITY
Agricultural growing conditions deteriorated further with persistent drought. Most of the winter wheat crop was in fair to poor condition with low soil moisture. While still higher than year-ago levels, crop prices edged down since the last survey period with softer export demand and slower ethanol production. Fed cattle prices held relatively steady, though feeder cattle prices rose as continued herd liquidations trimmed already low cow inventories. Robust demand from both farmers and nonfarm investors pushed farmland values to new highs, particularly for irrigated land due to water scarcity stemming from drought. District bankers reported collateral requirements held steady and ample funds were available for farm loans at historically low interest rates.
The drought was the main concern over the reporting period. Feed costs remained high and cattle supplies were tight because of the drought, while beef prices and demand both declined seasonally. Cotton prices rallied since the last report, and cotton exports were up slightly. In contrast, corn and grain sorghum prices declined modestly over the reporting period. Grain exports were lower than expected.
TWELFTH DISTRICT–SAN FRANCISCO
Production activity and sales were strong for agricultural producers, and extraction activity of natural resources used for energy production expanded on net. Demand for most crop and livestock products grew further, and high grain prices contributed to elevated land prices. Agricultural producers faced higher petroleum-based fuel costs but lower natural gas costs. Natural gas inventories declined a bit. In some slower-growing regions, demand for new gas and electric hookups remains tepid. In parts of the District, warmer-than-average weather conditions led to reductions in overall energy usage. Raw materials were adequately available, although water availability beyond 2013 was a concern in some regions due to a dry winter.