Weak farm income, coupled with reduced spending, has stressed the economy in rural America and led to "adverse" ripple effects on Main Street businesses, according to a new report from the Federal Reserve Bank of Kansas City.
"A sharp drop in the price of corn and soybeans contributed to a bleaker view of the [Tenth] District's farm economy in the second quarter," said the KC Fed's Ag Credit Survey released Thursday. "For many agricultural borrowers, cash flow already had been a significant concern, but likely was exacerbated by the recent drop in prices amid ongoing uncertainty surrounding the future for agricultural trade.
Chicago soybean futures remain down about 11 percent since China announced on April 4 it would slap a 25 percent tariff on the 106 U.S. products, including American soy. The tariff went into effect July 6 and soybean futures at one point were down more than 20 percent, but they rallied starting in mid-July but in recent sessions have struggled amid the escalating U.S.-China trade battle.