Federal Reserve Beige Book Comments

Periodically the Federal Reserve releases the Beige Book or more formally ‘Commentary on Current Economic Conditions by Federal Reserve District. This book summarizes the comments by Federal Reserve member banks relating to various economic sectors including Agriculture. These comments don’t provide any data but do help to understand trends or new conditions to follow.  You can read the book here: https://www.federalreserve.gov/monetarypolicy/beige-book-default.htm.

Let’s look at some of the comments about agriculture.

Chicago: “The outlook for crop income was unchanged through April and early May despite wet weather slowing planting in much of the District.” Chicago also reported some cold weather damage to some fields. Some dairy operations in Wisconsin had to find new milk buyers when Canada restricted ultra-filtered milk importations. Incomes for hog and cattle improved as prices rose.


St Louis: “Agriculture conditions deteriorated significantly due to flooding across the District”. Flooding across the region had hampered planting with cotton being farthest behind in planting progress.


Minneapolis: “District agricultural conditions remained weak since the previous report because of continued low commodity prices.” The district noted that planting was slowed by mid-May rains but that planting progress was on a par with the 5-year average.


Kansas City: “Persistently weak farm income continued to weigh on the District’s farm economy and agricultural credit conditions. Soybeans prices were lower than one year ago but soybeans remained profitable at current prices. Bankers in the western region of the district were expecting much lower farm income than those in the eastern part of the district. Wild fires devastated parts of the district and reduced cattle and wheat incomes.


Source: 31 May 2017 Beige Book, Federal Reserve System


Importance of Dairy Exports

Importance of Dairy Exports

The May 2017 Central Milk Marketing Order “Marketing Service Bulletin” had an interesting retrospective on dairy exports’ importance to the US dairy industry. The bulletin compared the change in total exports volume and dairy product categories since about 2003. Dairy solids exports for 2016 were 14.2% of total US milk solids produced compared to 5% in 2003. The value of dairy exports increased to $7.2 billion in 2014 falling to $4.8 billion in 2016. The 2003 value of dairy exports was approximately $1 billion. This change is even more dramatic when it is noted that before 2003, the US was a net importer of dairy.

The bulletin also points out the important products that are exported as well as the primary importers of US dairy products. Mexico accounts for 25.2% of US dairy exports, Southeast Asia 13.9% and Canada 13.1%. Just over 25% each cheese and nonfat dry milk account for the 2016 export value of US dairy exports. But on a percentage basis only 5.2% of US cheese production was exported while 57% of nonfat dry milk and skim milk powder were exported. Cheese export volume increased by over 5.5X from 2005 to 2016 while nonfat dry milk volume is 2X larger.

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Source: May 2017 Marketing Service Bulletin, Central Marketing Order

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Source: May 2017 Marketing Service Bulletin, Central Marketing Order

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Source: May 2017 Marketing Service Bulletin, Central Marketing Order

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Source: May 2017 Marketing Service Bulletin, Central Marketing Order

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Source: May 2017 Marketing Service Bulletin, Central Marketing Order