Full text of Agricultural Survey : Third Quarter 2004

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STATISTICAL RELEASE

F E D E R A L

R E S E R V E

BANK

DALLAS

Agricultural Credit Conditions at
Survey Banks In the Beventh District

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

Demand for Loans
Twenty percent of bankers cite an increase
in loan demand.
Percent
100

Third Quarter 2004

Eleventh District agricultural lenders reported
stable loan conditions in third quarter 2004.
Above-average moisture in late summer and
early fall improved range and pasture conditions
in most parts of the district and created favorable
weather conditions for good crop yields. Bankers
in the Southern Low Plains, Northern Low Plains,
Southern High Plains and North Central Texas
anticipate record yields of cotton. Some respondents said dryer weather was needed before
harvesting could begin in the Southern Plains.
Quaiterly Survey of
High cattle prices are allowing district ranchAgricultural Credit
ers to pay down their debts but are deterring
Conditions is compiled from livestock producers from restocking their herds
to optimum levels. Some bankers in cattle-proa survey of Eleventh District
ducing regions expect the number of agricultural
agricultural bankers. This
loans in their portfolios to decrease. Twentythree percent of those surveyed anticipate a
publication is prepared by
decline in the volume of feeder cattle loans in
the Federal Reserve Bank
the next three months, compared with 15.6 percent
a year earlier. Some bankers remain conof Dallas and is available
cerned about higher fuel prices.
without charge by writing
Here are additional details from the survey:
• The sale of farmland for recreational land
to the Research Department,
use continues to drive up prices in areas near
Federal Reserve Bank of
major metros. Thirty-six percent of respondents
expect
farmland values to increase in the next
Dallas, P.O. Box 655906,
three months, up from 19.5 percent a year ago.
Dallas, TIC 75265-5906,
• Bankers report a slight increase in
demand
for loans. Twenty percent reported
or by telephoning
greater demand for loans, up from 14.2 percent
(214) 922-5254. It is
a year earlier.
• The incidence of loan repayment remains
available on the web at
stable. Eighty-three percent of respondents exwww.dallasfed.org.
pect the rate of loan repayment to remain the
same, up from 78.5 percent in third quarter 2003.
• Fifteen percent of bankers expect the volFor questions regarding
ume of farm machinery loans to increase. This is
information in the release,
up from 4 percent a year ago.
• Fewer farmers are requesting renewals or
contact Laila Assanie,
extensions on outstanding loans. Only 2 percent
(214) 922-5191.
of those surveyed reported a greater number of
requests, down from 14 percent a year ago.

0
01 :'98

01 :'00

01 :'99

•

Less

01 :'01

•Same

01 :'02

01 :'03

01 :'04

•Greater

Funds Available for Additional Lending
Seventy-five percent report no change in funds
available for lending.
Percent
100

01 :'99

01 :'00

Less

01 :'01

Same

01:'02

01:'03

01 :'04

• Greater

Rate of Loan Repayment
Eighty-three percent of bankers report loan
repayment unchanged.
Percent
100

01 :'04

Less

• Same

• Greater

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Fourteen percent of bankers report that requests for
loan renewals or extensions are falling.
Percent
100

Loan-Deposit Ratios at Survey Banks

Average actual and desired ratios
Percent

~~~~~~~~~~~~~~~~-7 0

60
55
50

0
01 :'98

01 :'99

01 :'00

01 :'01

Less

•

01 :'02

Same

•

01 :'03

01 :'04

Greater

Amount of Collateral

II
II

Actual Ratio

40
35

Desired Ratio

2003:3

2003:4

2004:1

2004:2

2004:3

Ninety-two percent of bankers report that collateral
requirements remain unchanged.
Percent
100

DISTRIBUTION OF LOAN-DEPOSIT RATIOS

Banks Reporting {Percent)
60

Ratio

2004
July 1

2003
Oct. 1

Jan. 1

Apr. 1

16
18
11
24
32

20
19
12
18
31

23
15
15
20
28

Oct. 1

Less than 41 %
41% to 50%18
51% to 60%
61% to 70%
More than 70%

21
17
15
20
28

16
13
19
15
38

0
rn~

rn~

Less

•

rn~

Same

•

rn~

INTEREST RATE-FIXED

Greater

Average Rate (Percent)

Total Agricultural Loans at Eleventh District Banks
Agricultural lending continues to rise in third quarter 2004.

Ratio

2004
July 1

2003
Oct. 1

Jan. 1

April 1

7.41
7.47
7.39
7.59

7.25
7.33
7.32
7.21

7.37
7.36
7.25
6.95

Oct. 1

Millions of dollars (seasonally adjusted)

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

5,600
5,400

7.17
7.22
7.25
7.09

7.35
7.39
7.52
6.93

5,200
5,000

INTEREST RATE- VARIABLE

4,800

Average Rate {Percent)
4,600

2 003
Ratio

4 ,400
4 ,200

'93

'94

'95

'96

'97

'98

'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

200404
July 1

Oct. 1

Jan. 1

April 1

6.50
6.60
6.50
6.12

6.57
6.63
6.64
6.29

6.39
6.57
6.41
6.02

6.17
6.50
6.43
6.20

Oct. 1

6.65
6.82
6.74
6.32

STATISTICAL RELEASE

CROPLAND-DRYLAND

Rural Real Estate Values
October 1, 2004

Region
1

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.

Eleventh Federal Reserve District

Average
Value•
Banks'
Third Quarter 2004

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

161

769

3.5

7.3

TEXAS

145
17
18
11
13
16
22
6
16
10
3

769
303
382
355
473
713
1,359
846
1,347
983
754

3.6
-1.1
-0.7
1.6
1.7
0.3
8.8
9.6
-1.6
-0.9
7.1

7.7
-2.3
-0.2
1.0
6.0
14.5
18.9
9.9
3.5
0.8
-0.2

625

3.8

4.5

11
5

832
273

1.9
1.7

2.7
9.8

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
Northern Louisiana
Southern New Mexico

12
NEW

MEXICO

CROPLAND-IRRIGATED

Region

2
3
4
5
6
7

Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Timbers
North Central Texas
East Texas

11 Trans-Pecos and Edwards Plateau

12 Southern New Mexico
13 Northern Louisiana

Percent Changes3
in Values from
Previous Previous
Quarter
Year

DISTRICT

111

847

2.0

3.8

TEXAS

94
15
17
10
9
7
3
n.r.
11
5
3

779
590
725
551
739
1,217
2,960
n.r.
1,867
967
922

1.9
2.1
-0.9
1.1
0.5
-0.l
4.1
n.r.
-4.1
6.7
4.1

3.0
3.3
2.4
-8.7
1.7
24.2
-18.8
n.r.
-1.5
15.8
1.8

1,135

3.7

-3.5

9
8

1,068
1,437

1.1
3.0

-1.0
9.6

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

Average
Value•
Banks'
Third Quarter 2004

Northern Louisiana
Southern New Mexico

RANCHLAND

Eleventh District Real Land Values
Dry/and, irrigated land and ranch/and values edged up
3.5 percent, 2 percent and 3 percent, respectively

Region

Average
Value•
Banks'
Third Quarter 2004

Percent Changes3
in Values from
Previous Previous
Quarter
Year

DISTRICT

173

594

3.0

10.5

2000 dollars per acre

TEXAS

1,800

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

156
16
13
11
12
19
24
13
20
8

715
210
221
235
408
813
1,364
958
1,798
920

3.8
-5.5
-1.6
4.2
2.7
2.4
6.5
0.7
1.6

10.0
-2.0
10.2
1.4
15.9
13.5
20.5

886

5.6

12.5
-2.1
11.6

581

5.9

9.0

9
8

782
246

5.5
-2.9

3.9
14.9

1,600
1.400
1,200
1,000
800

,. _... ,. _

Dryland

400
200

--------

Ranch land

,..

Northern Louisiana
Southern New Mexico

--0.7

--0.2

STATISTICAL RELEASE

Third Quarter
Comments
District bankers were asked for any
additional comments concerning agricultural land values or credit conditions.
These comments have been edited.
Region 2-Southern High Plains
1 ·~

Crops are better than we have ever seen
them. Hopefully, we can get them harvested
soon. We need ideal weather conditions and
a late freeze for production to be very good.
We are hoping that prices will be decent.
Rain is delaying preparation for harvesting the cotton crop. We are anticipating an
excellent crop.

Region 3-Northern Low Plains
Prospects for the cotton crop are excellent if we have a normal fall. Production could
be the best we have had in a number of years.
We have a good crop and low prices for
cotton. We are seeing more row crop farmers
turning to livestock production.
Hunting land with water (either a creek
or a river) is bringing a big premium. For
example, a farm that was owned by the city
and used solely to produce water recently
sold for over $600 per acre. The farm was
located on the river and was not suited for
agricultural use.

Region 4-Southern Low Plains
This is t11e first time I can remember the
pastures being so lush and being on the right
side of the beef supply and demand. The cotton crop looks like it will be the best in years.
Conditions have been favorable in all
agricultural sectors this season. However,
untimely heavy rainfall is causing concern
about harvesting the cotton crop in the south
plains.
Rea l estate prices for ranchland are inflated due to recreational land use.
Cattle prices are good. We need rain to
plant the wheat crops.
Land prices continue to be driven up by
hunters from the [Dallas/ Fort Worth] metroplex.

Region 6-North Central Texas
Hopefully, we won't have another mad
cow scare and tl1e cow market will remain
good. Hay is plentiful in North Texas. Even if
we have a bad winter, the market shouldn't
break very much. Hopefully, we have seen the
high point of fuel prices (gas and diesel), and
those prices will continue to decline this fall
and winter.
Cattle prices are at a record for stockers
and feeders. That is great for the cow-'calf
operators but scary for the stocker operators
and cattle feeders.
Agricultural contribution now has little
impact on the value of land in our county
because of our close proximity to t11e
Dallas/ Fort Worth metroplex. For our remaining farmers and ranchers, however, t11e recent
year has been very beneficial witl1 t11e betterthan-average rainfall and good market prices.
In central Williamson County, crop yield5
have been very good. Corn crops are yielding
120 bushels per acre, and cotton is averaging
two to two and a half bales per acre. Production costs are very high. Diesel, fertilizer and
chemicals have all increased, so the net will
not be as good. Livestock producers are enjoying record prices, pastures are lush and tl1ere
is an abundance of hay. Prices and tl1e future
outlook continue to be very good.
Cattle prices are at an all-time high,
allowing some producers to pay off tl1eir debt
on cattle for tl1e first time ever. This will
decrease the percentage of agricultural loans
in our loan portfolio.

Region 8-Central Texas
Rice yields are down 15 percent due to a
wet June. Cow/calf operators will make a
profit in 2004. Thousands of acres of farmland
are being leveled using laser technology via
the USDA Farm Service Agency's equipment
program. In all, the work may take three to
five years to complete.
One by one, producing acreages are
being subdivided into mini-ranches and are
driving land values up. On the bright side, tl1e
strong cattle market and good grass-growing
weather are keeping the ranchers in business.
Demand for feeder cattle loans has been
steady. Some customers have needed longer
revolving lines of credit to compensate for tl1e
high cost of cattle. We have seen some large
reductions on term loans because of higher
priced cattle.

Region 9-Coastal Texas
Historically, high cattle prices have
healed lots of rancher financial wounds!
This has been an expensive year. Crop
yields are above average, but prices on commodities are marginal. It will be hard to project a positive cash flow for 2005.

Region 10-South Texas
Ranch real estate prices continue to
increase. Prices are over $1,000 per acre for
brushland! Sales of and interest in small land
tracts, resulting from fragmentation, have both
weakened. Prices are perhaps getting too
high, and t11e market may finally be saturated.

Region 11-Trans-Pecos and
Edwards Plateau
Conditions are very good in tl1e ranching
area. The cost of replacing livestock is keeping many from restocking to ideal levels.
Many have held back more ewe lambs, nanny
kids and heifers, while others have sold more
to take advantage of the high prices. The
region is healing well from years of drought.
The price of fuel is a very big concern.
The recent World Trade Organization ruling
against cotton payments is also a concern;
witl1out government support at tl1e current
price of cotton, I believe it will be very difficult for West Texas cotton producers. West
Texas has had very good late summer rains.
Range conditions are excellent. The cotton
fields need warm dry conditions to begin harvesting.

Region 12-Southern New Medco
Moisture conditions have improved in
most of tl1e region. Winter pastures seem adequate, altl1ough there are some dry spots.
Prices are good, but profits are down significantly because of the last five years of
drought.
Recent rains have improved most range
conditions. However, drought still exists. We
rea lly need prolonged periods of moisture.
Most crops look good for this time of year:
The onion harvest is complete, t11e chili crop
is well under way, cotton is just starting and
milo grain is about 30 days off. There was
some recent hail damage.
This year looks to be better than tl1e last
four, and tl1at could change the market this
spring.

Full text of Agricultural Survey : Third Quarter 2004

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