Federal Reserve

Higher commodity prices soften farm income decline, say banks

Springtime increases in corn, soybean, and wheat prices brightened the outlook for the agricultural sector amid expectations of lower farm income this year than in 2023, said Federal Reserve regional banks in the Beige Book report on Wednesday. The Chicago and Dallas banks said the discovery of bird flu in dairy cattle was a cause for concern.

Interest rates rise faster than farmland values, says economist

For the first time since 2001, interest rates are rising faster than farmland values, creating a potential obstacle to land purchasers, said assistant economist Ty Kreitman of the Kansas City Federal Reserve Bank. “With interest costs now above average land value appreciation, farm operating profits will determine the magnitude of returns for financed land,” he said.

High interest rates discouraging farmers from borrowing money

Ag bankers say farmers are tapping their savings from recent boom years instead of borrowing money at what are the highest interest rates since 2007. The average operating loan issued this past summer was nearly 20 percent smaller than the average a year ago, the lenders said in surveys by regional Federal Reserve banks.

High interest rates fall heaviest on less-profitable farmers

Interest rates doubled in the past year for agricultural loans, the fastest increase since the early 1980s, with the least-profitable farmers feeling the impact the most, said the Minneapolis Federal Reserve Bank. “All producers should prepare for elevated interest rates by incorporating higher interest expenses into cash flow projections regardless of profitability and debt levels,” it said.

High costs and softer markets weigh on outlook for farm economy

With interest rates sharply higher, farmers are increasingly relying on savings or tightening their belts instead of seeking bank loans to cover their expenses, according to ag lenders nationwide. “The outlook for the U.S. farm economy has moderated in recent months as risks of more limited profit opportunities have grown alongside softening in commodity markets and elevated production expenses,” said the Kansas City Federal Reserve Bank.

U.S. inflation fight darkens economic outlook, ag lender says

The Federal Reserve will continue to raise interest rates into 2023, "and the outlook for the coming year grows increasingly gloomy," said agricultural lender CoBank on Monday. The strong dollar "will pressure U.S. exports as the global economy struggles and U.S. goods remain expensive," it said, with warfare in Ukraine injecting additional volatility into world food supplies.

Cropland values soar by 15 percent in Midwest and Plains

High commodity prices and low interest rates fueled a sharp 15 percent increase in the value of cropland in the Midwest and Plains in the third quarter, according to surveys of ag bankers by four regional Federal Reserve banks. "Alongside prospects for further strength in commodity markets, the outlook for farm finances and agricultural land values through the end of 2021 remained strong," said a summary of the surveys.

Flush times for farmers, buoyed by strong markets and pandemic aid

Farmers in the Midwest and Plains are reaping a cash bonanza that has dramatically improved their finances a year after the pandemic pummeled commodity markets and prompted a record $46 billion in federal payments to agriculture, said three regional Federal Reserve banks on Thursday. (No paywall)

Strongest farm outlook in years, say ag bankers

Farm income and land values surged in the closing months of 2020, lifted by higher commodity prices and large federal payments, according to farm lenders across the Midwest and Plains. With the commodity rally expected to persist, the farm economy was in its best shape in years, said the …

Farmland values rise in Midwest and Plains

Ag bankers in the Midwest reported the largest year-over-year increase in agricultural land values, 2 percent, since 2014, said the Chicago Federal Reserve on Thursday. The Kansas City Federal Reserve said land values rose by 1 to 3 percent in the Plains, with the value of ranchland and non-irrigated cropland rising the most.

As coronavirus weakens ag sector, federal payments may be key

If 2019 was stressful for farmers and ranchers, with low commodity prices and bad weather for crops, the coronavirus crisis is compounding the economic challenges this year, said three Federal Reserve banks in recently released quarterly reports. (No paywall)

Federal support may determine farm sector outlook

Farmland prices are holding steady and agricultural banks are financially strong — potentially two key sources of support for the farm sector during the disruptions of the coronavirus pandemic — said the Federal Reserve in a report on Thursday. (No paywall)

Farmers borrow less, and tariff payments may be why

Agricultural lending declined during the second half of 2019, and while that reflected lower production costs, it “likely also was due to an increase in revenue from government payments (Market Facilitation Program) connected to trade disputes that lingered through the year,” said the Federal Reserve on Thursday.

Short on cash, some farmers will sell assets during winter

Low commodity prices and high costs are tightening the credit squeeze on the farm sector, with little expectation of improvement in the near term, according to ag bankers in the Midwest and Plains. Some farmers and ranchers will liquidate assets during the winter to stay afloat, and some highly leveraged operators will be forced out of business, they said.

Profitability of many midwestern corn, soy farms ‘will almost surely fall’

Farmland values are falling for the fifth year in the Midwest, and one factor in the decline is “muted expectations for farm income” this year, said the Chicago Federal Reserve Bank on Thursday. “The profitability of many corn and soybean farms will almost surely fall from their 2018 levels — possibly by a lot for some.”

Rise in commodity prices slows decline in farm income, say bankers

Agricultural lenders expect farm income, which weakened in the spring, to continue to decline this summer, although a recent rally in corn, soybean, and wheat prices will act as a stabilizer, said Federal Reserve banks in Kansas City, Minneapolis, and St. Louis on Thursday.

Producers borrow more, need more time to repay

Agricultural bankers are lending a markedly larger amount of money to farmers and ranchers, with loan volume up 11 percent from April, May, and June of last year, said the Federal Reserve on Thursday. It was the highest rate of growth in loan volume in the spring quarter since 2011.

The greatest ag risk, say some bankers, is an adverse trade outcome

Farm income weakened in much of the Midwest and Plains during the opening months of this year, said reports from regional Federal Reserve banks on Thursday, with ag bankers telling the St. Louis Fed that an adverse trade outcome is clearly the most significant threat to agriculture in 2019. On Friday, the Trump administration increased the tariffs on $200 billion worth of Chinese goods.

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