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Farm Income Declines in 3rd Quarter, Bankers More Optimistic for 4th – St. Louis Fed

Ernst Undesser
From the Federal Reserve Bank of St. Louis November 14, 2017

Farm Income Declines in 3rd Quarter, Bankers More Optimistic for 4th – St. Louis Fed

Soybean harvest. ©Debra L Ferguson Stock Photography

According to the latest survey of agricultural bankers in the Eighth Federal Reserve District, farm income declined during the third quarter of 2017 compared with a year earlier.

Bankers were modestly more optimistic when asked about the prospects for farm income in the fourth quarter. Compared with their expectations registered in the second-quarter survey, proportionately more bankers reported that the demand for loans, the rate of loan repayment, and farm income were stronger than they initially expected.

Quality farmland values rose 1.1 percent in the third quarter from a year earlier, while ranchland and pastureland values increased by slightly more, 4 percent. By contrast, cash rents fell in the third quarter. In the third quarter of 2017, proportionately more bankers reported an increased demand for loans.

However, proportionately more bankers also reported a decline in the availability of funds and in the rate of loan repayment. Compared with the second-quarter averages, interest rates were modestly higher among most loan categories in the third quarter, regardless of whether the loans were fixed rate or variable rate. This issue contained three special questions.

The first question asked about loan repayment problems. Nearly 60 percent of bankers reported that operating loans (lines of credit) were expected to have the largest repayment problems, while nearly a quarter of respondents reported no expected increase in repayment problems.

The second question asked about the performance of loans that have been restructured in the past year. Nearly 70 percent of respondents reported that the restructuring has been in line with expectations.

Finally, the third question asked our agricultural bankers to identify the types of online services offered to their customers. Sizable majorities of banks offer a variety of online services to their customers.

Full article.

Eighth District

Map of the Federal Reserve’s 8th District. Click Image to Enlarge


Source: : https://research.stlouisfed.org/publications/regional/ag-finance/2017/11/09/2017-third-quarter/

Ernst Undesser
From the Federal Reserve Bank of St. Louis November 14, 2017