Agricultural Survey

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Charts

What changes occurred in non-real-estate farm loans at your bank in the past three months compared with a year earlier?

What changes occurred in the volume of farm loans made by your bank in the past three months compared with a year earlier?

What trend in farmland values do you expect in your area in the next three months?

What change occurred in credit standards for agricultural loans at your bank in the past three months compared with a year earlier?

Quarterly comments

District bankers were asked for additional comments concerning agricultural land values and credit conditions. Some comments have been edited for grammar and clarity.

• Drought conditions will cause a reduction of wheat pasture cattle loans. Also, [we are] seeing a culling of cow herds due to dry conditions. Silage yields are down also.

• Input costs remain high. December and March futures show large upside with potential prices above $0.90 on cotton. Due to changes in government programs, [we are] very hopeful that projected government payments will remain in place. Without this payment, it will be hard for producers to pay out. Drought conditions continue affecting crops daily. At present, most, if not all, dry-land crops have been abandoned and reported to insurance, and irrigated crops are all marginal. Future data center [construction] will greatly affect farmland prices in the West Texas area.
• Extreme drought and excessive heat have greatly hampered all crops and livestock production. 

• Our lending area is facing a challenging year as persistent drought and high temperatures continue to place significant pressure on wheat, hay and grazing conditions, while input costs remain elevated and commodity prices remain generally weak. Although cattle prices remain historically strong, they have declined from their recent highs, while drought and limited forage are making it increasingly expensive and difficult for producers to maintain their herds. Many stock ponds are now dry or nearly dry, forcing producers to make difficult decisions about their operations, and we are seeing some producers reduce their herds substantially or, in some cases, exit the cattle business altogether.

• The weather pattern throughout much of the current cotton crops growing season has been extremely hot and dry. The majority of the cotton crop will be taken out by the federal crop insurance. The uncertainty of future government payments and crop income have caused most of our customers to pull back on buying additional equipment and any other purchases outside of the necessary operating expenses.

• Overall demand for ag real estate loans has remained steady to decreasing as higher interest rates deter investment. Ag real estate for sale has increased inventory and been on the market longer, with the exception of good pasture land. Increased commodity prices for row crop are anticipated to increase farm incomes into the last quarter of the year. Cattle prices have remained strong, although they are off from highs set in the second quarter. Replacement female demand is strong. Overall credit conditions are stable, but we are monitoring borrowers more closely and remain cautious in underwriting. A persistent drought during the summer growing season may result in lower-than-expected yields for row crops, and pasture conditions have deteriorated. Hay demand may see a sizable increase going into fall.
• Same comment as always: Agriculture land is being commercially developed as fast as it possibly can be. Soon there will be no agriculture land left 75–100 miles from Houston.

• Grain sorghum and corn harvest are mostly complete. Yields were light, as was the bushel weight. Sesame and sunflowers along with cotton are wrapping up. Both sesame and sunflowers yield and quality did better than expected but still below average. Cotton crops are good, especially the irrigated cotton. Improved commodity prices late in season are helping a little. Hot and dry weather is taking its toll on the range and pastureland. It is also impacting vegetables and citrus as water reliability is still a challenge for producers despite improved reservoir conditions. Vegetable planting is in full swing. Citrus harvest is right around the corner, and the fruit set for this season looks promising, maybe 15 to 20 percent more than last year.

• Ag is slowing down with significant acreage being converted to data [centers] and alternative energy sources.

• Drought continues to worsen across the southern plains and desert. High mountain areas are getting good moisture, but very isolated. Cattle prices continue to hold but have slipped some over the summer. Drought is causing area farmers to hold on hay prices and even increase in some cases. We expect to see continued slight decline in cattle prices through the fall shipping period, but drought may force the sale of heifers and deeper cull rates on base heard. With drought so widespread, there are some that think cattle prices could strengthen further if slaughter rates on heifers go back up.

Historical data

Historical data can be downloaded dating back to first quarter 2000.

• Land Values
• Cash Rents
• Farm Lending Indexes
• Loan Volume Indexes by Loan Type
• Anticipated Farmland Values and Credit Standards
• Interest Rates by Loan Type