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National & World Ag News Headlines |
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Chicago Fed: Regional Farmland Values Down in 2015
USAgNet - 02/12/2016
According to the latest survey of agricultural lenders in the Seventh Federal Reserve District, regional farmland values between October through December 2015 were down one percent from the three months previous. For the year as a whole, values dropped
three-percent in the district.
Wisconsin ag property increased by two-percent from last year and was two-percent higher compared to the previous quarter. But Illinois, Indiana and Iowa values fell for the year, while Michigan showed growth in the fourth quarter, but was down for the year.
In the most recent questionnaire of 199 rural bankers, survey respondents said farmers in the region saw their corn and soybean prices continue to fall as record production and yields drove commodity values lower compared to previous years.
"Along with slumping agricultural prices, the deterioration of agricultural credit conditions extended into the fourth quarter of 2015," said Reserve Economist David Oppedahl. "Repayment rates on non-real-estate farm loans were much lower in the October
through December period of 2015 than in the same period of the previous year."
Oppedahl goes on to say that for 2016, almost two percent of farm loan customers were not expected to qualify for additional operating credit at the banks of the survey respondents.
Meanwhile, demand for non-real-estate farm loans in the past quarter was up from the same period of 2014. With about half of survey respondents observing an increase in the demand for non-real-estate loans and 16 percent observing a decrease, the index of
loan demand was 134 in the fourth quarter of 2015--which was the ninth quarter in a row above 100.
Looking ahead, banks are projecting that a small amount of their farm customers with operating credit in 2015 were not likely to qualify for new operating credit in 2016. There was a strong sentiment among survey respondents that the downward trend for
capital spending on farmland or land improvements, buildings and facilities, machinery and equipment, and trucks and autos would continue into 2016. Moreover, 59 percent of the responding bankers anticipated farmland values to decline further in the first
quarter of 2016, and none anticipated them to rise.
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