Although corn and soybean prices are lower than a year ago, farmland values in the Midwest are up by 1 percent compared to this point a year ago, the first year-over-year gain in three years, said the Chicago Federal Reserve Bank. But land values fell in the central Plains, according to ag bankers surveyed by the Kansas City Fed.
Both of the regional Feds said the farm sector showed signs of stabilizing. The pace of deterioration in credit conditions has slowed. “With the fall harvest approaching, agricultural lenders and borrowers remain concerned about prospects for the farm economy … particularly in regions with limited potential for high crop yields,” said the Kansas City bank. “However, bankers were generally less pessimistic about economic conditions in the farm sector in the second quarter than in each of the past two years.”
The Chicago Fed said its quarterly survey of bankers found a 1 percent increase, year-on-year, in farmland values, “the first such upward movement since mid-2014.” However, land values dipped in Illinois and Indiana while gaining in Iowa and Wisconsin. There was not enough data to make an estimate for Michigan. Three-fourths of the bankers surveyed by the Chicago Fed said they expect land values to hold steady into the fall.
“Despite some signs of stabilization in the District farm economy, prolonged weakness has continued to dampen business activity on Main Street in rural areas,” said the Kansas City Fed. “In fact, in line with a year ago, 85 percent of bankers reported that the weakening farm economy has led to weaker business activity.”