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Second Quarter 2018

Agricultural
Survey

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

Survey
Highlights

B

Figure 1

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?

ankers responding to the second-quar-

Index

ter survey noted continuing drought
conditions across many regions of the

Eleventh District. Lack of moisture continues
to put pressure on pasture grazing for cattle
in many regions, and hay inventories were reported as being low. Many respondents noted
wheat and corn crops were suffering due to
extreme heat.
Demand for agricultural loans overall decreased for an 11th consecutive quarter. Loan
renewals and extensions rose but at a slower
pace, while the rate of loan repayment con-

2018:Q1

2018:Q2

pGreater

Same

qLess

Demand for loans*

-4.3

-7.3

15.1

62.5

22.4

Availability of funds*

14.1

12.3

14.8

82.7

2.5

-10.6

-9.7

5.3

79.7

15.0

15.3

5.3

9.7

86.0

4.4

Rate of loan repayment
Loan renewals or extensions
Index
50
40

real-estate farm loans fell compared with a year

0
-10

and feeder cattle loans stabilized after nearly

-20

three years of decline. Volumes of all other loan

-30

categories continued to decline in the second
quarter (Figure 1).
District real ranchland values surged this
quarter, while dryland and irrigated cropland
values declined (Figure 2). According to bankers who responded in both this quarter and

Loan renewals
or extensions

20
10

The volume of operating loans flattened out,

Availability of funds*

30

tinued to decline. Overall, the volume of nonago, as did the volume of farm real estate loans.

Texas (Table 1). Southern New Mexico respon-

Rate of loan
repayment

Demand for loans*

-40
-50

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

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

second quarter 2017, nominal dryland and
ranchland values increased year over year in

Percent reporting, Q2

Non-real-estate farm loans

Percent reporting, Q2

2018:Q1

2018:Q2

pGreater

Same

qLess

0.0

-6.0

11.1

71.8

17.1

dents indicated cropland values increased

Feeder cattle loans*

-13.2

-0.6

11.0

77.4

11.6

while ranchland values decreased, and north-

Dairy loans*

-14.1

-15.3

2.2

80.3

17.5

ern Louisiana respondents reported cropland

Crop storage loans*

2.9

-8.5

2.2

87.1

10.7

and ranchland values all increased.

Operating loans

7.8

0.9

14.2

72.6

13.3

Farm machinery loans*

-9.6

-20.9

4.7

69.7

25.6

Farm real estate loans*

-3.5

-6.9

11.5

70.1

18.4

The anticipated trend in the farmland values
index rose to its highest level since mid-2014,
suggesting respondents expect farmland values
to trend up in the upcoming months. The credit

*Seasonally adjusted.

standards index indicated continued tightening

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.

of standards on net (Figure 4).

} 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

XXMany borrowers’ incomes were less than
expected as all the 2017 cotton crop has been
ginned. Quality issues reduced the price substantially under projections. The area continues to be
in extreme drought with little chance of rain.
XXThere

are extreme drought and dangerous
fire conditions.

Region 2 • Southern High Plains

XXDrought

conditions are the major problems
in our area. Future prices for our commodities
are looking favorable currently if we are able
to produce the product. Cattle are having to be
supplemented. Hopefully, we will receive needed
moisture soon and often.

XXLand sales have been very limited—mostly on
Conservation Reserve Program land purchased
for use in irrigated organic peanut production.
XXIn most areas, dryland cotton is nonexistent.
With the high temperatures and lack of rain, we are
struggling to keep enough moisture to get irrigated
cotton up and going. We are anticipating many insurance claims to be filed. Unfortunately, in many
cases, insurance does not cover the input costs.
XXCrop prospects are being challenged by extreme heat and wind and almost no rainfall. Irrigated crops are having difficulties establishing a
stand. Rain has fallen in brief, severe downbursts,
most of which has run off. Dryland crops will be
few and far between. Grazing is almost all depleted, with the decision to cull or to feed looming.
Hay supplies are becoming scarce but have been
augmented by the baling of wheat. One bright
spot has been the big run-up in cotton prices. If
these prices hold, those who can stay up with irrigation will be rewarded as will producers who
fail their crops for insurance.
Region 3 • Northern Low Plains

XXDrought conditions persist, although rain
showers brought temporary relief in some areas.
Livestock herds will have to be dramatically reduced, and dry land production crops will be a
fraction of typical years. Any producers that are
leveraged are likely candidates to not survive.

XXDrought conditions are threatening the dryland
cotton crop and forage crops. Pasture conditions are fair. Supplemental feeding of livestock
is taking place on a limited basis, but without rain
soon, that will be the norm. Herd reduction has
not started, but stocker cattle were sold earlier
than normal as the wheat played out early.
XXGood rains saved cow and calf producers
from another selloff. Most stock ponds are now
full and grass is growing. Wheat fields are like
we summer fallowed them, so we can only hope
for good grazing and yields next year as most
farmers are getting a head start on field prep.
Region 4 • Southern Low Plains

XXConditions are very dry. Our wheat crop was a
total loss. Pastures are in very poor shape. Several operators had to reduce herds to one-half or
less. Tanks are very low. Cotton fields are generally very dry. Spotty rains in the eastern portion
of the county have improved conditions. Most
areas are starting to dry plant.
Region 5 • Cross Timbers

XXRecent dry and hot weather in our area is starting to take a toll on pastures and hay fields. The
hay surplus we had a few months ago is mostly
gone due to a hard winter. There has not been
much change in land values, but a little less
seems to be moving. Milk prices are down some,
and feed costs are rising for dairymen.
XXPastures are extremely dry, and the lack of
stock water is fast becoming a problem due to
lack of spring rains and recent hot weather.
XXProperty values in our area have seen a substantial rise over the last two years.
Region 6 • North Central Texas

XXUnpredictable weather, weather extremes and
poor crop prices continue to plague the local agricultural community.
XXOur wheat crop was above average, and
stocker calf performance was above average. A
drought began in late April and has continued,
and the corn crop is expected to be well below
average. Crop insurance adjusters should arrive

Agricultural Survey • Second Quarter 2018 • Federal Reserve Bank of Dallas

12
N E W

M E X I C O

Regions of the Eleventh
Federal Reserve District

in the next seven to 10 days. We need rain very
soon to give cotton crop a reasonable chance.

XXAfter the flood in late February, we had an
unusually cool and mild April. Now we have
gone from virtually no spring-like weather into
full-blown summer. I believe there will be a good
hay crop this year.
XXThis is the beginning of a dry, hot summer,
and crops are beginning to suffer.
Region 7 • East Texas

XXRow crops in the area are in excellent condition, corn and milo crops are being made and
cotton is being watered. Early high temperatures
and high winds have dried pastures and hay
fields earlier than normal. Hay inventories are
very low. Ranchers will have to make some critical decisions concerning the size of their herds
and hay requirements if conditions persist.
Region 8 • Central Texas

XXOilfield activity continues, with rigs drilling
and leasing going on in some areas. Recent rains
were spotty at best. High heat is starting to take
its toll on corn and grasses. Cattle remain in fair
condition, with prices still holding up across the
board. Cow prices remain low as drought conditions in other areas of Texas and the country
have caused more cows than normal to come
into the sale barns. The two biggest concerns
going forward for the next quarter will be rain
and making hay.
Region 9 • Coastal Texas

XXCurrent drought conditions are a major
concern for 2018 crop yields.

Table 1

Rural Real Estate Values—Second Quarter 2018

1

Banks1

3

Average
value2

Percent change
in value from
previous year3

Cropland—Dryland
District*

2

4

L O U I S I A N A

5
6

11

7

T E X A S

8

9

10

13

95

1,871

4.0

Texas*
1 Northern High Plains

80
9

1,883
956

4.0
2.5

2 Southern High Plains

8

763

8.6

3 Northern Low Plains*

8

834

-1.6

4 Southern Low Plains*

6

982

10.1

5 Cross Timbers

6

1,733

4.5

15

2,870

10.8

7 East Texas*

6

2,675

2.2

8 Central Texas

10

3,757

-2.3

9 Coastal Texas

3

1,867

0.0

10 South Texas

4

2,250

-2.3

11 Trans-Pecos and Edwards Plateau

5

2,740

10.6

5
10

450
2,845

6.7
4.2

6 North Central Texas

12 Southern New Mexico
13 Northern Louisiana

Region 11 • Trans-Pecos and
Edwards Plateau

XXRainfall in the Edwards Plateau has been a
mixed bag in the last quarter. Fortunately, livestock prices have remained fairly strong, and the
futures market still looks fairly good for producers. Predator control still ranks among the top
worries for the sheep and goat producers of our
area. Wool and mohair prices are strong at present for those who can keep herds alive, given the
difficulty brought about from predators.
XXCattle market continues on a downward trend.
XXSheep and goat prices continue a cyclical de-

crease, with cattle prices being lower also, though
all are above historic averages. Rainfall has been
spotty, but most have at least received some,
with some pasture conditions being very good for
this time of year. With the higher temperatures,
pasture conditions where rainfall has not been received are poor. Predator problems continue to increase, being significant in an ever-growing area.

Region 12 • Southern New Mexico

Cropland—Irrigated
District*

73

2,497

0.3

Texas*
1 Northern High Plains

56

2,252

-2.3

9

2,119

-0.4

2 Southern High Plains

9

1,634

-0.9

3 Northern Low Plains*

5

2,149

5.8

4 Southern Low Plains

4

1,300

0.0

5 Cross Timbers

3

2,950

0.0

6 North Central Texas

5

2,910

4.8

7 East Texas

4

2,688

-60.0

8 Central Texas

7

4,131

-16.3

9 Coastal Texas

n.a.

n.a.

n.a.

10 South Texas

4

3,375

9.7

11 Trans-Pecos and Edwards Plateau

4

3,713

7.6

12 Southern New Mexico

7

3,300

1.9

10

4,120

15.0

101
86

1,914
2,280

7.5
8.0

13 Northern Louisiana

Ranchland
District*
Texas*
1 Northern High Plains

8

694

-7.5

2 Southern High Plains

6

850

30.0

3 Northern Low Plains

7

893

0.0

4 Southern Low Plains*

7

1,191

-12.1

7
15

1,907
3,000

3.3
7.8

XXCommodity prices are holding steady. Rainfall
is badly needed.

5 Cross Timbers
6 North Central Texas

XXWe have had spotty rain over some of the trade

7 East Texas

area, but overall conditions are still extremely dry.
There are still large runs at local livestock auctions
as breeders trim herds because of dry range conditions. Wheat harvests will be limited, while corn
planting is under irrigated conditions only.

XXRange conditions remain very dry and, save a
quality monsoon season, the late summer and early
fall will see producers reducing cattle herd substantially. The forage crop shortfall over the winter has
yielded improved prices for wheat, triticale and
alfalfa. Dairy continues to struggle with low milk
prices, compounded by increasing feed input costs.

8

2,913

2.1

8 Central Texas

11

5,909

18.5

9 Coastal Texas

3

1,833

0.0

4

2,550

6.8

10

2,205

9.1

12 Southern New Mexico

7

329

-4.1

13 Northern Louisiana

8

2,169

2.3

10 South Texas
11 Trans-Pecos and Edwards Plateau

*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 2018 • Federal Reserve Bank of Dallas

Figure 2

Figure 3

Real Land Values

Real Cash Rents

Q2 2018 dollars per acre
2,600
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0

Q2 2018 dollars per acre per year
60

Irrigated

Q2 2018 dollars per acre per year

Irrigated

120

50

Dryland

140

100

40
Dryland

Ranchland

80

30
60
Ranchland

20

40

10
0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

NOTE: All values have been seasonally adjusted. Real values are created by
deflating the nominal values using the implicit price deflator for U.S. gross
domestic product.

Table 2

20
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

0

NOTE: All values have been seasonally adjusted. Real values are created by
deflating the nominal values using the implicit price deflator for U.S. gross
domestic product.

Figure 4
Anticipated Farmland Values and Credit Standards

Interest Rates by Loan Type
Long-term farm real estate

Intermediate term

Other farm operating

Feeder cattle

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

Percent reporting, Q2

2018:Q1

2018:Q2

pUp

Stable

qDown

1.6

12.6

14.5

83.6

1.9

What change occurred in credit standards for agricultural loans at your bank in the past three months
compared with a year earlier?†
2018:Q1

2018:Q2

pTightened

Same

qLoosened

15.5

11.1

11.1

88.9

0.0

Credit standards

Fixed (average rate, percent)

Index

2017:Q2

6.05

6.17

6.05

5.89

2017:Q3

6.17

6.30

6.24

5.93

50
40
Credit standards†

30

2017:Q4

6.24

6.29

6.25

5.99

2018:Q1

6.41

6.51

6.28

6.10

2018:Q2

6.55

6.57

6.50

6.24

20
10
0
-10
-20

Variable (average rate, percent)
2017:Q2

5.75

5.81

5.74

5.47

2017:Q3

5.92

5.96

5.95

5.64

2017:Q4

5.91

5.93

5.97

5.65

2018:Q1

6.18

6.17

6.04

5.75

2018:Q2

6.25

6.28

6.23

5.90

Federal Reserve Bank of Dallas

Anticipated trend in farmland values*

-30
-40
-50

2011

2012

2013

2014

2015

2016

2017

2018

*Seasonally adjusted.
†

Added to survey in second quarter 2011.

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.

Agricultural Survey

Agricultural Survey is compiled from a survey of Eleventh District agricultural bankers, and data have been seasonally adjusted as necessary. Data were collected
June 5–13, and 118 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/surveys/agsurvey.aspx, where you may sign
up for free email alerts to be automatically notified as soon as the latest survey is released on the web. For questions, contact Christopher Slijk, 210–978–1411.
Agricultural Survey • Second Quarter 2018 • Federal Reserve Bank of Dallas