Full text of Agricultural Survey : Fourth Quarter 2004

View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

STATISTICAL RELEASE

F E D E R A L

R E S E R V E

ALLAS

Agricultural Credit Conditions at
Survey Banks in the Eleventh District

Quarterly Survey of
·cultural
Credit Conditions in the
Eleventh Federal Reserve District

Demand for Loans
Seventy-three percent of bankers report loan
demand remained steady over the past three
months.
Percent
100

Fourth Quarter 2004
The Fourth Quarter Survey found increased
optimism in the agricultural community as the
Eleventh District ended the year with aboveaverage rainfall and steady lending conditions.
Unusually wet weather in 2004 relieved drought
conditions, improved topsoil moisture levels and
enhanced crop yields throughout the district.
There were reports of rain hampering cotton
harvest in the plains; however, a near record
cotton crop was expected. Cattle ranchers continued to enjoy high prices. Overall, some district bankers anticipated that farmers would end
Quarterly Survey of
the year on a positive note.
Here are additional details from the survey:
Agricultural Credit
• Sixty-five percent of bankers would like
Conditions is compiled fro m
to increase the volume of agricultural loans in
a survey of Eleve nth District their portfolios, up from 57 percent in fourth
quarter 2003.
agricultural banke rs. This
• Sale of farmland for investment and recreational use continues to push up prices. Dryland,
publication is pre pared by
irrigated land and ranchland values are up 0.5
the Fede ral Rese rve Bank
percent, 0.8 percent and 3.6 percent, respectiveof Dallas and is available
ly, from the previous quarter. Moreover, 31 percent of lenders expect farmland values to
witho ut charge by writing
increase in the next three months, up from 19
to the Research Department, percent a year earlier.
• Although high cattle prices are deterring
Federal Reserve Bank of
some ranchers from restocking their herds, 71
Dallas, P.O. Box 655906,
percent of respondents expect feeder cattle
loans
to remain the same, up from 61 percent
Dallas, TX 75265-5906,
last quarter.
or by telepho ning
• High cattle prices are helping ranchers
pay down their debts. The rate of loan repay(214) 922-5254. It is
ment is up strongly; 18 percent of responding
ava ilable o n the web at
bankers reported greater rates of loan re payment, compared with just 11 percent in the preW\vw. dallasfed .org.
vious quarter.
• Bankers expect new equipment purchases
to stay infrequent. For the second consecutive
For questions rega rding
quarter, 73 percent of bankers surveyed anticiinfo rmation in the release,
pate no change in demand for farm machinery
contact Laila Assanie,
loans.
• The cost of funds edged up 27 basis
(2 14) 922-5191.
points, from 1. 51 in t11ird quarter 2004 to 1. 78 in
the fourth quarter.

01 :'98

01 :'99

01 :'00
Less

01 :'01
•

01 :'02

Same

•

01 :'03

01 :'04

Greater

Funds Available for Additional Lending
Seventy-six percent report no change in
funding availability
Percent
100

0
0 1:"98

01 :'99

01 :'00
Less

01:'01
•

Same

01 :'02
•

01 :'03

01 :'04

Greater

Rate of Loan Repayment
Seventy-four percent of respondents say that the
loan repayment ra te remains the same.
Percent
100

01 :'98

01 :'99

01 :'00
Less

01:'01
•

Same

01 :'02
•

0 1:'03
Greater

01 :'04

STATISTICAL RELEASE

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Requests for renewals or extensions are falling, say
18 percent of bankers.
Percent
100

Loan-Deposit Ratios at Survey Banks

Average actual and desired ratios
Percent

- - - - - - - - - - - - - - - - - - 70
40

60
50
m~

Less

•

Same

•

Actual Ratio

Greater

Amount of Collateral
Ninety-four percent of bankers made no changes
to collateral requirements.

Desired Ratio

40
2003:4

2004:1

2004:2

2004:3

2004:4

Percent
100

DISTRIBUTION OF LOAN-DEPOSIT RATIOS

Banks Reporting (Percent)
60

Ratio

Jan. 1

Apr. 1

20
19
12
18
31

23
15
15
20
28

2004
July 1

Oct. 1

2005
Jan. 1

17
13
20
14
36

19
18
17
16
30

Less than 41%
41% to 50%
51% to 60%
61% to 70%
More than 70%

0
01 :'9B

0 1:'99

0 1:'00

01 :'01

Less

01 :'02

Same

•

01 :'03

01 :'04

21
17
15
20
28

INTEREST RATE- FIXED

Greater

Average Rate (Percent)

Total Agricultural Loans at Eleventh District Banks
Agricultural lending nudges up in fourth quarter 2004.

Ratio

Jan. 1

2004
April 1
July 1

Oct. 1

2005
Jan. 1

7.36
7.41
7.51
6.91

7.65
7.65
7.68
6.94

Millions of dollars (seasonally adjusted)

Feeder cattle
Other farm operating
Intermediate term
Long-term farm real estate

6,000
5 ,BOO
5,600

7.25
7.33
7.32
7.21

7.37
7.36
7.25
6.95

7.17
7.22
7.25
7.09

5,400

INTEREST RATE- VARIABLE

5,200
5,000

Average Rate (Percent)

4 ,BOO
4 ,600

Ratio

Jan. 1

2004
April 1
July 1

Oct. 1

2005
Jan. 1

6.58
6.75
6.67
6.27

7.15
7.25
7.06
6.59

4,400
4,200
4 , 000+--~~-~~-~-~~-~-~~~

'94

'95

'96

'97

'9B

'99

'00

'01

'02

'03

Note: Some of the volatility observed in agricultural loan levels is due
to the acquisition of several Eleventh District banks by banks
headquartered in other Reserve Districts.

'04

Feeder cattle
Other farm operating
Intermediate term
Long-term farm real estate

6.57
6.63
6.64
6.29

6.39
6.57
6.41
6.02

6.17
6.50
6.43
6.20

STATISTICAL RELEASE

CROPLANO-ORYLANO

Rural Real Estate Values
December 31 , 2004

Region

Number of banks reporting land values.
2
Prices are dollars per acre, not adjusted for inflation.
3
Not adjusted for inflation.
n.r.-Not reported due to insufficient responses.
1

Beventh Federal Reserve District

Average
Banks'
Value'
Fourth Quarter 2004

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

157

772

0.5

8.8

TEXAS
Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Timbers
North Central Texas
East Texas
Central Texas
Coastal Texas
South Texas
Trans-Pecos and
Edwards Plateau

141
14
19
9
13
18
21
8
14
n.r.

775
306
393
367
468
713
1,334
837
1,374
995
n.r.

0.7
1.1
0.1
2.2
-0.3
- 0.2
0.4
0.7
-0.5
1.0
n.r.

9.7
-3.5
4.1
5.6
4.0
7.7
18.0
20.7
3.0
2.0
n.r.

675

6.4

13.8

8
8

793
296

- 1.7
- 1.5

-0.6
21.8

Nor thern Louisiana
Southern New Mexico

12
NEW

MEXICO

CROPLAND-IRRIGATED
Region

1 Northern High Plains
2 Southern High Plains
3 Northern Low Plains
4 Southern Low Plains
5 Cross Timbers
6 North Central Texas
7 East Texas

10 South Texas

11 Trans-Pecos and Edwards Plateau
12 Southern New Mexico
13 Northern Louisiana

Average
Banks'
Value'
Fourth Quarter 2004

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

107

853

0.8

4.3

TEXAS
Nor thern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Timbers
North Central Texas
East Texas
Central Texas
Coastal Texas
South Texas
Trans-Pecos and
Edwards Plateau

91
12
19
9
9
7
4
4
8
6
n.r.

798
589
734
597
742
1,260
3,001
1,017
1,576
1,058
n.r.

2.5
1.5
0.7
3.1
0
1.9
- 1.2
- 1.4
- 12.3
11.4
n.r.

4.8
-0.4
1.2
3.9
2.3
20.2
6.7
20.2
-17.8
24.1
n.r.

1,365

12.5

23.4

8
8

990
1,346

- 3.6
-6.6

-4.8
3.8

Northern Louisiana
Southern New Mexico

RANCHLAND
Region

Eleventh District Real Land Values
Dry/and, irrigated land and ranch/and values
continue to rise.
2000 dollars per acre
900
800

-"'-'.

lrriga~

700

600
Dryland
500
I

400

..,,.---

300
200
'94

•95

'96

.....

- ,,,,.- _,

.... ...

,. I

Ranch land

'97

'98

'99

'00

'01

'02

'03

'04

Average
Banks'
Value'
Fourth Quarter 2004

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

168

635

3.6

16.1

151
13
14
8
12
21
23
14
17
10
3

780
225
212
252
407
851
1,506
948
1,841
925
1,034

5.0
3.3
-2.2
6.4
-0.4
3.4
5.6
- 0.8
1.2
1.4
6.7

18.7
- 1.7
-0.5
11.8
13.5
11.0
30.5
-1.0
10.9
-1.6
31.6

663

8.7

25.3

Northern Louisiana
Southern New Mexico

7
10

776
213

1.7
-9.3

7.4
-4.7

STATISTICAL RELEASE

Fourth Quarter
Comments
District bankers were asked for any additional comments concerning agricultural
land values or credit conditions. These comments have been edited.

Region 1-Northern High Plains
Fall harvest as well as winter wheat
planting has been delayed by unseasonably
wet conditions. Crop yields may be adversely affected by this weather pattern, as
it might shorten the growing cycle.
Volatility of the cattle market has a lot
of producers watching from the sidelines.

Region 2-Southem High Plains
Crops are very good. If they are harvested in a timely manner and materialize
as expected, there is a possibility of increased land values and new machinery
loans. However, the rainfall has hurt the
condition of the crops and will continue to
do so unless the harvest is completed within the next 30-45 days.
Due to the wet weather, we are just
beginning to get the cotton harvested. The
turnout is good; we hope that the current
price holds. The peanut crop was good.
Cotton crop yields have been excellent.
The harvest is delayed by wet weather, but
yields have not been materially affected.
Most of our farmers will apparently have
excess funds this year after all their debt
service is complete. Cotton ginning will
probably take a couple more months, ending in late February or March 2005.

Region 3-Northern Low Plains

It is difficult to correctly answer questions relating to land values if recreational
buyers are omitted. Very little (to none) of
the ranchland in our region is being sold to
agricultural producers. Recreational purchasers are driving up ranchland values.
It looks like our county will have a
record crop, which is wonderful, especially
in light of the prices they [farmers] are
receiving. Cow, calf and feeder cattle are
doing well. The adequate rainfall indicates
2005 prospects are above average.

Region 4-Southern Low Plains

,_
Abundant rain has slowed our cotton
harvest, but cotton production looks good.
Our lakes have still not caught any runoff
and are in poor condition. The wheat crop
is off to a good start.
The rancher is enjoying the wet weather and high prices . Cotton farmers need
sunshine to get their crop out [of the fields]
quickly.
The cotton crop is excellent. There
have been some harvest delays due to rain,
but the rain has been wonderful for the
pastures and farmland. Everybody is in a
much better mood. Drought conditions had
persisted since 1995.
The recent rains and snow have slowed
the cotton harvest considerably. As a result,
we could have lower yields and prices. New
equipment purchases are not very common.
However, the moisture should be very helpful later in the year.
Continued heavy rains have severely
hampered winter wheat planting and the
cotton harvest.
There is an excellent cotton crop, but
unfavorable weather is keeping producers
out of the fields .

Region 5-Cross Timbers
With 8 inches of rain received in the
past 20 days, all stock tanks are full and
area lakes have gone from 30 percent to 75
percent full.
Land for agricultural operations has
diminished. Land is now being sold for
recreational purpose. The current crop is
coastal hay. Cattle prices remain steady. The
goat population is steady.

Region 6 - North Central Texas
The cost of producing this crop year
has exceeded all projections. The production cost for corn is probably up $20 per
acre since last year. However, the price of
corn is down significantly. Above-average
yields will be required in the central Texas
Blacklands to make this a break-even year
at best.
With the cow market still soaring,
everyone is in tl1e market for land either to
lease or buy; tl1e availability [of land] is
scarce. The cattle market appears to still be
very strong, with demand at an all-time
high for American beef. Gas and diesel
prices have started to come down since the
election.

Our agricultural producers just finished
an above-average year, primarily due to substantial rainfall and above-average cattle
prices.
We have had some isolated land sales
ranging in price from $6,500 to $10,000 per
acre. The average price is around $4,000
per acre.
Prices remain good for all livestock.
Rainfall has been above average.

Region 8-Central Texas
Our bank has been acquiring quite a
few new cattle customers. It seems like
many other area banks are becoming less
interested in making agricultural loans.
Low prices are hurting rice and row
crop farmers.

Region 11-Trans-Pecos and
Edwards Plateau
It is particularly difficult to pin down
the sales price per acre . This area of Texas
is a popular recreational area due to its natural beauty (hills, rivers, wildlife, etc.) . As a
result, demand for land has pushed up
prices for plain old ranch country to $1 ,000
per acre. The land is becoming too expensive for the agricultural producer to pay for,
and many of our old ranch customers are
selling their lands for high prices, taking
those lands out of agricultural production.
Mild winter (to date), coupled with
favorable summer and fall conditions, has
resulted in a very good winter with minimal
supplemental feeding required. Some increases in stocking rates have occurred and
should accelerate if we are blessed with a
good wet spring. High replacement costs
have kept many from restocking, but there
is more optimism than six years ago.
Values have risen slightly in the last six
months due to diversity. To diversify income
and holdings, some farm and ranchland has
been segmented for recreational purposes,
such as hunting, tourism and nature trails.

Region 12--Southern New Mexico
With increased precipitation during
2004, tl1e ranching and farming in our lending area have become more stable. We look
forward to a more stable industry during
2005 than in the past several years.
Moisture levels are much improved.
We are seeing more non-rancher absentee
owners purchasing ranches. Subdivision
continues.

Full text of Agricultural Survey : Fourth Quarter 2004

FRASER