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Second Quarter 2015

DALLASFED

Agricultural
Survey

Quarterly Survey of Agricultural
Credit Conditions in the
Eleventh Federal Reserve District

Survey
Highlights

ankers responding to the secondquarter survey reported receiving abundant rain, which has
improved ground moisture and lake and
stock tank levels. However, wet conditions have prevented or delayed harvesting and planting and, in some areas, has
damaged crops. Respondents in a couple
of regions noted concern for continued
low crop prices and their impacts on
profitability and repayment rates. The
livestock sector remained strong in the
second quarter, and rain improved pastureland conditions.
District farmland values increased
in the second quarter. Real irrigated
cropland values were up only slightly
over last quarter, while real dryland and
ranchland values saw stronger increases,
likely boosted by subsiding drought conditions.
After expectations about the trend
in farmland values turned pessimistic in
the first quarter, bankers now anticipate
farmland values to trend up in the third
quarter. The credit standards index indicated continued tightening of standards,
although the vast majority of respondents noted no change.
Demand for agricultural loans
picked up again this quarter, marking the
fourth consecutive quarter of increasing
demand after six years of falling demand.
Loan repayment rates continued to slow
this quarter, while loan renewals and extensions increased. Overall, the volume
of farm loans was up compared with a
year ago, accounted for by increases in
feeder cattle and operating loans.

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

Percent reporting, Q2

2015:Q1

2015:Q2

pGreater

Same

qLess

8.3

14.3

28.0

58.3

13.7

Availability of funds*

21.0

16.5

18.6

79.3

2.1

Rate of loan repayment

–3.2

–6.4

7.9

77.8

14.3

0.8

7.9

13.5

81.0

5.6

Demand for loans*

Loan renewals or extensions
Index
50

Availability of funds*

40
30

Rate of loan repayment

20
10
0
–10
Loan renewals
or extensions

–20
–30

Demand for loans*

–40
–50

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

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

Percent reporting, Q2

2015:Q1

2015:Q2

pGreater

Same

qLess

Non-real-estate farm loans

0.8

4.6

21.4

61.8

16.8

Feeder cattle loans*

0.0

11.6

22.2

67.2

10.6

–10.2

–8.0

3.1

85.8

11.1

–4.3

–3.2

7.5

81.8

10.7

5.9

15.6

24.2

67.2

8.6

Farm machinery loans*

–16.5

–17.8

6.9

68.4

24.7

Farm real estate loans*

–17.7

–8.7

11.2

68.9

19.9

Dairy loans*
Crop storage loans*
Operating loans

*Seasonally adjusted.
NOTE: Survey responses are used to calculate an index for each item by subtracting the percentage of
bankers reporting less from the percentage reporting greater. Positive index readings generally indicate
an increase, while negative index readings generally indicate a decrease.

} Quarterly Comments
District bankers were asked for additional comments concerning
agricultural land values and credit conditions. These comments
have been edited for publication.
Region 1 • Northern High Plains

XXWe have had good rain during the first part of
the year, which should help the yields on our wheat
crops.

XXWidespread rainfall has been plentiful, boosting the potential for grazing and future crop yields.
Immediate results include delayed wheat silage
harvest and cotton, corn and grain sorghum planting.
Cattle marketing has also been interrupted by wet
conditions.

XXWe have had 13 inches of rain over the past 60
days. That is more than our annual total for both 2011
and 2012. Rangeland looks as good as it has in the
past 10 years. There are some planting delays, but
after the three-year drought we are coming out of,
nobody is complaining.

Region 2 • Southern High Plains

XXWe are thankful for the rains this year. Hopefully
we can make a good dryland crop and some money.
Rains have helped the pastures, and cattle are looking better than they have for a while.

XXSeveral farmers have been unable to secure farm
financing for 2015 after a very bad 2014 farm year
and current low commodity prices. The near record
rainfall for May was greatly needed, and overall
farmer attitudes have improved over the past month.
Wet conditions have delayed planting an average of
two weeks, while some isolated areas couldn’t be
planted at all. Even though the drought appears to
have been broken, low commodity prices continue to
worry area farmers, bankers and rural businesses.

XXPlanting is continuing at a furious pace to meet
insurance deadlines but is progressing well. We
should have enough underground moisture to make a
very decent dryland crop, and if we can get additional
rain in July and August, the crop could be exceptional.

XXProducers have struggled to get crops planted due
to recent rains; planting cotton before the insurance
deadline has been difficult. The moisture profile is
excellent. We have leaned on Farm Service Agency
(FSA) guaranties this year more than in the past due
to carryovers and very thin margins in cotton. FSA is
overwhelmed with applications in our area.

XXIt has been a challenging loan renewal season.
A large share of our cotton-farming customers
experienced carryover because the crop was generally short as rainfall came too late to be of help and
market prices collapsed at harvest time. Fortunately,
almost all were able to refinance against equity in
land or equipment. Meanwhile, getting this crop

planted has been a terrible challenge. Hardly anything
is up to a stand. Cotton acres in areas north of Lubbock will be switched into short season corn or corn
silage and milo. There is abundant subsoil moisture,
but we will be fighting the clock as to crop maturity.

Region 3 • Northern Low Plains

12
N E W

M E X I C O

Regions of the Eleventh
Federal Reserve District

XXRainfall caused an unbelievable change in the
complexion of our land and attitudes. We must not
forget we are still in a drought and lend and act
accordingly.

Region 4 • Southern Low Plains

XXCotton planters are starting to move, and wheat
harvest is underway. Approximate yield breakevens for most producers are between 400 and 500
pounds, while the average county yield is closer to
275 to 300 pounds, but $0.60 for cotton is just not
a viable option. We expect producers to go to wheat
pasture and yearlings in the fall if we can find a good
marketing strategy to hedge market and basis risk.

Region 5 • Cross Timbers

XXMost area lakes and tanks are full and the grass
is abundant. Grazing conditions are better than they
have been in years.

XXMost stock tanks are now full; however, our regional lake is only up from 15 percent capacity to 30
percent, so our area still needs lots of running water.

Region 6 • North Central Texas

XXExcess rainfall has resulted in a wheat disaster.
Harvest is delayed because of wet fields, and the
quality is declining daily due to low bushel weight
and sprouting. Many farmers are already asking
crop insurance agents for adjusters to look at farms.
Corn has also suffered from nitrogen deficiency
in the heavier clay soils caused by excess rainfall.
Combined with declining grain prices, this will cause
problems later this summer for the farm economy.

XXWhat looked like a bumper wheat crop has turned
ugly from all the rain.

XXVery serious flooding the last 60 days may have
ruined the wheat crop.

Region 7 • East Texas

XXLand values are holding steady to increasing. Demand for agricultural real estate is showing a slight
increase. The livestock market is doing extremely
well.

Agricultural Survey • Second Quarter 2015 • Federal Reserve Bank of Dallas

Region 8 • Central Texas

XXLandowners are happy with recent rainfall. For
the most part, there was no serious flooding, except
along the Guadalupe River and those ranchers are
accustomed to those circumstances. Ponds are full,
corn crops look good and hay is being cut at record
levels. Cattle prices remain high, and replacement
heifers are difficult to locate and expensive to
purchase.

XXIt has been a blessing to see rain come to our
area. The ground is finally soaked, and we should
have the best early summer we have ever had in
terms of grass and tank water. Cattle are in good
shape, and prices continue to hold at record levels
for all classes of cattle. What little crops we have
are starting to take off; however, it looks like corn
may be tasseling early, which will limit the size of
the ears and yield.

XXExcessive rains may have hurt yield potential
and, coupled with current commodity prices, have
created the potential for shortfalls in repayment this
fall.

XXAn abundance of rain has created a few operational problems for our producers, but these problems pale in comparison to the adverse conditions
of severe drought. Ranchers are happy because of
strong cattle markets and plenty of grass.

XXA number of our revolving lines of credit are
being increased due to higher purchase prices and
operating costs.

Region 9 • Coastal Texas

XXThis year has been a planting and harvesting
challenge. Excessive rains slowed wheat planting
early on and then delayed wheat harvest in the past
45 days. Most wheat harvested was above average,
but crops did suffer a five- to 10-bushel loss due to
excessive rains. The majority of grains and cotton

Rural Real Estate Values—Second Quarter 2015
1
Banks1

Average
value2

Percent change
in value from
previous year3

Cropland—Dryland
District*

L O U I S I A N A

5
6

T E X A S

109

1,684

3.1

Texas*
1 Northern High Plains

95
15

1,703
797

3.0
8.1

2 Southern High Plains

688

0.8

3 Northern Low Plains*

746

–2.2

4 Southern Low Plains*

1,026

7.4

5 Cross Timbers

1,670

6.4

2,308

–4.8

7 East Texas*

2,430

5.1

8 Central Texas

3,728

6.1

9 Coastal Texas

2,217

26.3

n.a.

1,750

4.4

4
10

356
2,360

–6.3
5.3

6 North Central Texas

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

crops were planted, but some were prevented from
being planted with insurance being taken. Overall,
crops should have a good year if the weather
remains stable. Cotton prices have remained in the
63 to 66 cent per pound range, and with no major
shifts expected at this time, the cotton crop will
have to yield above average to break even in 2015.
Cattle markets remain strong, and producers are
optimistic about replacing liquidated herds. Pastures
at this time are above average. Land values remain
stable, with some upswing being localized from
area to area.

XXA very wet spring has delayed planting; in fact,
there is a significant amount of cotton acreage that
still needs to be planted. Producers are struggling
with the decision to take preventive planting insurance or gamble with yields later. Excessive May
rains could reduce yields depending on location and
soil makeup. Ranchers are in great shape.

Region 11 • Trans-Pecos and
Edwards Plateau

Cropland—Irrigated
District*

2,353

11.2

Texas*
1 Northern High Plains

2,105

8.0

1,979

15.1

2 Southern High Plains

1,583

1.4

3 Northern Low Plains*

1,643

5.1

4 Southern Low Plains

1,500

3.6

5 Cross Timbers

2,717

5.1

6 North Central Texas

2,600

0.0

7 East Texas

2,663

5.1

8 Central Texas

3,650

4.6

9 Coastal Texas

2,488

2.3

10 South Texas

2,883

13.1

11 Trans-Pecos and Edwards Plateau

2,983

1.2

12 Southern New Mexico

3,617

25.9

13 Northern Louisiana

3,494

7.0

114
98

1,717
2,049

3.7
3.4
10.9

Ranchland
District*
Texas*
1 Northern High Plains

584

2 Southern High Plains

650

5.5

Plateau pastureland in wonderful shape. Livestock
numbers remain low, although much restocking is
going on at this time and prices are still at all-time
highs for all classes of livestock.

3 Northern Low Plains

757

–8.2

4 Southern Low Plains*

1,013

–19.4

5 Cross Timbers
6 North Central Texas

7
13

1,714
2,319

–2.6
2.0

XXPastures are in good condition due to above

7 East Texas

2,620

2.1

8 Central Texas

4,775

3.5

9 Coastal Texas

2,025

5.6

2,833

11.6

1,985

3.8

285

14.8

1,932

5.4

XXExcellent area rains have left the Edwards

average rainfall.

Region 12 • Southern New Mexico

XXRainfall is positively impacting all segments of
agricultural operations in our area.

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

*Seasonally adjusted.
1
Number of banks reporting land values.
2
Prices are dollars per acre, not adjusted for inflation.
3
Not adjusted for inflation and calculated using responses only from those banks reporting in
both the past and current quarter.
n.a.—Not published due to insufficient responses but included in totals for Texas and district.

Agricultural Survey • Second Quarter 2015 • Federal Reserve Bank of Dallas

Real Land Values

Real Cash Rents
2005 dollars per acre per year

2005 dollars per acre
2,200

2005 dollars per acre per year

Irrigated

120
Irrigated

2,000

1,800
1,600

Ranchland

1,400
1,200

Dryland

1,000

100

800

600

Ranchland
10

400

200
0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

NOTE: All values have been seasonally adjusted.

Anticipated Farmland Values and Credit Standards
Long-term farm real estate

Intermediate term

Other farm operating

Feeder cattle

Interest Rates by Loan Type

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Fixed (average rate, percent)

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

6.12

6.19

6.05

5.79

6.12

6.22

6.00

5.80

6.03

6.14

5.96

5.77

2015:Q2

pUp

Stable

qDown

–1.4

4.1

10.8

82.5

6.7

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

2014:Q2

Percent reporting, Q2

2015:Q1

2015:Q2

pTightened

Same

qLoosened

7.8

12.2

13.7

84.7

1.5

Index
50

2015:Q1

6.09

6.12

6.01

5.74

5.93

6.04

5.93

5.74

40
30

Anticipated trend
in farmland values*

Credit standards †

10
0
–10

Variable (average rate, percent)

–20

2014:Q2

5.73

5.75

5.64

5.30

5.69

5.75

5.64

5.37

5.65

5.71

5.62

5.39

2015:Q1

5.56

5.66

5.54

5.26

*Seasonally adjusted.
†Added to survey in second quarter 2011.

5.52

5.57

5.51

5.27

NOTE: Survey responses are used to calculate an index for each item by subtracting the percentage of
bankers reporting less from the percentage reporting greater. Positive index readings generally indicate an
increase, while negative index readings generally indicate a decrease.

–30

DALLASFED

–40
–50

2011

2012

2013

2014

2015

Agricultural Survey
is compiled from a survey of Eleventh District agricultural bankers, and data have been seasonally
adjusted as necessary. Data were collected June 2–10, and 138 bankers responded to the survey.
This publication is prepared by the Federal Reserve Bank of Dallas and is available without charge by
sending an email to pubsorder@dal.frb.org or by calling 214-922-5270. It is available on the web at
www.dallasfed.org/research/agsurvey.
For questions, contact Amy Jordan, 214–922–5178.
Agricultural Survey • Second Quarter 2015 • Federal Reserve Bank of Dallas

Full text of Agricultural Survey : Second Quarter 2015

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