Ag Economy is Pretty Solid but Not Without Challenges
The agricultural economy is in relatively good shape coming into 2023. Cortney Cowley, the senior economist for the Oklahoma City branch of the Kansas City Fed, says things in the district are solid but pressures are beginning to mount. She remains optimistic, however, due to conditions that support strong prices headed into the new year.
Cowley… “I do know that the fundamentals are there are fairly strong prices because, coming into the Russia-Ukraine scenario and into 2022, we have a very tight inventory for a lot of key agricultural commodities like corn, soybeans, and wheat, so international demand has been very strong. We kind of finally caught demand up with supply in the U.S., and we got into a situation of much tighter inventory the last couple of years, and that has continued this year because of the drought and slightly lower production. So, I think on the crop side that could help support prices going into next year. In the Kansas City Fed District, cattle account for about 50 percent of total farm revenues and are a very important industry for our district’s agricultural commodity. And cattle prices, I would expect to be very strong because of all the herd liquidation that we've seen this year due to drought.”
Cowley sited drought in the western U.S. as a continued concern. Recent rains will help, but it will take a lot more both in terms of snow pack and groundwater recharge.