Agricultural credit conditions throughout the Tenth Federal Reserve District of western Missouri, Nebraska, Kansas, Oklahoma, Wyoming, Colorado and northern New Mexico continued to deteriorate in the second quarter of 2016, the Federal Reserve Bank of Kansas City reported, and bankers “expect farm income to remain weak in the third quarter.”
Nearly 75 percent of bankers responding to the Kansas survey reported farm income was less than a year ago, due to falling agricultural prices. Weak income increased demand for non-real estate farm loans and loan renewals in the second quarter. Additional increases are expected in the third quarter, the Kansas City Fed said.
Slimmer profit margins also have pulled down the rate of loan repayments, the Kansas Fed said. Almost half of all respondents reported that loan repayments rates in the second quarter were lower than a year ago. In addition, repayment rate problems have increased slightly over the past year, the Kansas City Fed reported.
Meanwhile, the Chicago Federal Reserve Bank said agricultural credit conditions in the Seventh Federal Reserve District of Illinois, Indiana, Iowa, Michigan and Wisconsin weakened in the second quarter from a year ago. “However, there were some signs of improvement from what had been observed in the previous two quarters,” the Chicago Fed reported. A survey anticipated higher non-real-estate loan volumes for agriculture in the third quarter.