Agricultural credit conditions are likely to remain strong through the end of this year, although bankers expect farm income and loan repayment rates, now the healthiest since 2010, to soften in the months ahead, said the Kansas City Federal Reserve on Thursday. Agricultural loan balances increased by 5 percent in the spring quarter as farmers and ranchers took out production loans.
“The outlook for agricultural credit conditions remained strong despite a recent moderation in the farm economy,” said the Kansas City Fed following a survey of commercial lenders nationwide. “A slight pullback in the prices of key farm products and elevated expenses could thin margins for some producers, but farm finances remained strong following several years of considerable strength.”
Slightly more than half of all banks, and 80 percent of agricultural banks, reported an increase in farm debt from a year ago. But delinquency rates declined during the second quarter of the year to reach their lowest level since 2010, said the regional Fed’s Ag Finance Update. “Farm debt continued to increase alongside faster growth in farm production loans.”