Quarterly US Rural Economic Review: Stalled Trade Talks, Record Rains Upend Agriculture

Key Points

• The world economy continues to slow amid the ongoing U.S.-China trade war. Hopes are for talks to resume soon between the U.S. and China, but confidence in the trade war ending in 2019 is dimming.
• The Federal Reserve in June voted to keep rates steady, but signaled it is open to lower rates in the last half of 2019 on signs that the U.S. economy is slowing.
• Persistent rainfall across the U.S. has significantly disrupted spring planting. Federal aid of $16 billion for additional trade relief and $3 billion for disaster relief, will help soften the blow for farmers, but not ag retailers.
• Cold and wet weather in California is causing quality issues with some crops, with significant crop losses expected for strawberries and cherries.
• Livestock profitability has improved with African Swine Fever, supporting hog and beef production margins. Dairy prices have begun to recover as production growth slows.
• Several of the nation’s wholesale power markets saw significant changes in Q2, but FERC’s amendments to adjust the demand curve for the PJM market in the east is particularly noteworthy.
• A prohibition against Huawei network technology may force rural telecommunications operators to seek replacement equipment from alternative vendors.

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