Company: AGM-PH
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0000845877-25-000204
Chunk: 295

Company: FEDERAL AGRICULTURAL MORTGAGE CORP
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 2
Chunk 295
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 Weather

Exogenous factors facing farm and food producers can create uncertainty and market instability within the sector. Some of the external market conditions that have and could continue to adversely affect the farm and food sectors for the remainder of 2025 include foreign trade and trade policy, supply chain disruptions, and weather and environmental conditions. The U.S. agricultural sector has become increasingly dependent on foreign markets as a source of demand, making trade policy an important consideration for farms and food. The USDA projects that U.S. agriculture exports will drop to $170.5 billion in 2025, 3% lower than 2024 and down 13% relative to peak levels in 2022. The USDA incorporated the expected impact of tariffs in its May Outlook for U.S. Agricultural Trade report, but the export forecast could shift depending on the implementation of future trade policies. Through May 2025, agricultural export values were 3% lower in 2025 relative to 2024. Slower global growth could be a headwind for consumer-oriented products like animal proteins, dairy, fruits, and nuts. Ukrainian corn and wheat export shipments continue to rebound and have approached pre-2022 levels. Looking ahead, economic and geopolitical uncertainties could lead to higher volatility for the U.S. dollar throughout the rest of 2025.  

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Severe weather conditions continue to shape some agricultural subsectors. In 2024, the U.S. experienced 27 separate billion-dollar weather disasters, as tracked by the National Oceanic and Atmospheric Administration ("NOAA"). Many of those events affected agriculture, including midwestern storms, flooding, western wildfires, excessive heat, and drought. Through June 30, 2025, Farmer Mac's portfolio had not experienced any material performance degradation as a result of disruptive weather events from 2024 or 2025. Federal crop insurance provides a strong mitigator against this risk, but farmers and ranchers face increasingly severe weather incidents and production volatility. 

Drought conditions increased modestly in intensity and prevalence in second quarter 2025, largely across several western and southwestern states. Nearly one-quarter of California was classified as in severe drought in second quarter 2025, up from 0% at the beginning of 2024. Farmer Mac had minimal exposure to the areas affected by the southern California wildfires in early 2025. Several other Southwest states continue to face prevalent drought conditions as well, including Arizona, Utah, and New Mexico, although agricultural production is significantly less prominent in those states compared to California.