Springtime increases in corn, soybean, and wheat prices brightened the outlook for the agricultural sector amid expectations of lower farm income this year than in 2023, said Federal Reserve regional banks in the Beige Book report on Wednesday. The Chicago and Dallas banks said the discovery of bird flu in dairy cattle was a cause for concern.
“Prospects for 2024 farm income increased slightly, though income is still expected to fall below its 2023 level,” said the Chicago Fed, describing changing conditions since the April 17 version of the Beige Book. “Corn, soybean, and wheat prices moved higher. Most livestock prices were up, though egg prices were down. Continuing concerns about the financial impact of avian influenza in cattle were offset by additional support from the federal government.”
The Dallas Fed said that “the spread of avian influenza among dairy cows remains a concern for the supply of milk, though it is not a food safety issue due to the pasteurization process.” With drought conditions easing, cotton production should increase this year, it said, but cotton prices “have slipped. Most other crop prices rose … while cattle prices eased off highs.”
“Conditions in the Tenth District agricultural economy softened through early May and farm finances tightened slightly,” said the Kansas City Fed. “Corn, soybean, and wheat prices increased slightly since April but remained weak, keeping profit opportunities narrow.” The Minneapolis Fed said agricultural conditions in its district “remained weak amid some positive developments,” including a moderation in production costs. The St. Louis Fed said higher labor costs were “an additional stressor” in its region.
“Row crop farmers struggled amid low demand and excess supply, and many do not expect to turn a profit this year,” said the Atlanta Fed. “Poultry producers saw some improvement in revenues from domestic sales, attributed to reduced supply resulting from avian influenza.” Some sawmills on the West Coast closed this spring due to sluggish demand, said the San Francisco Fed.
