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Third Quarter 2018

Agricultural
Survey

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

Survey
Highlights

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 third-quarter

Index

survey noted some easing of drought
conditions across several regions of the

Eleventh District. However, many contacts continued to note significant difficulties with dryland crop production due to lack of moisture.
Hay inventories remain very tight, which continues to put pressure on livestock production.
Demand for agricultural loans overall decreased for a 12th consecutive quarter. Loan
renewals and extensions rose slightly, while the
rate of loan repayment largely stabilized after
declining in the prior two quarters. The volume

2018:Q2

2018:Q3

pGreater

Same

qLess

Demand for loans*

–7.3

–7.2

11.7

69.4

18.9

Availability of funds*

12.3

10.1

12.4

85.3

2.3

Rate of loan repayment

–9.7

–0.8

9.4

80.5

10.2

5.3

7.1

11.0

85.0

3.9

Loan renewals or extensions
Index
50

compared with a year ago, while the volume of

0
-10

modestly, while volumes of all other loans de-

-20

clined sharply in the third quarter (Figure 1).

-30

District dryland values ticked up this quarter, while irrigated cropland and ranchland values declined (Figure 2). According to bankers
who responded in both this quarter and third
quarter 2017, Texas nominal dryland and ranchland values increased year over year (Table 1).

Loan renewals
or extensions

cantly. The volume of operating loans declined

Availability of funds*

of non-real-estate farm loans was slightly lower
farm real estate loans declined more signifi-

Percent reporting, Q3

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

Southern New Mexico respondents indicated

Percent reporting, Q3

2018:Q2

2018:Q3

pGreater

Same

qLess

Non-real-estate farm loans

–6.0

–1.6

15.5

67.4

17.1

an increase in dryland and ranchland values

Feeder cattle loans*

–0.6

–13.1

8.2

70.4

21.3

but a slight decline in irrigated cropland values.

Dairy loans*

–15.3

–17.8

0.0

82.2

17.8

–8.5

–15.1

2.7

79.5

17.8

0.9

–1.5

13.7

71.0

15.3

Farm machinery loans*

–20.9

–16.5

7.9

67.7

24.4

Farm real estate loans*

–6.9

–9.1

12.5

65.9

21.6

an increase in cropland and ranchland values,
and northern Louisiana respondents reported

The anticipated trend in the farmland values index was positive for a sixth consecutive
quarter, inching up to its highest value since
2014 and suggesting continued expectations
for farmland values to trend up in the upcom-

Crop storage loans*
Operating loans

ing months. The credit standards index indi-

*Seasonally adjusted.

cated continued tightening of standards on net

NOTES: 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.

(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

XXTariffs have created some volatility in the markets,
especially cotton and cattle. Late-summer moisture
should provide a good start to winter wheat. Corn looks
good and will start harvesting by mid-September.
XXFarmers are expecting corn yields to be near record levels across much of the High Plains. We still
have areas that have received very little rain, but
most are back to near normal.
Region 2 • Southern High Plains

XXSpotty rains have helped the cotton crop fill out the
top portion of the plant, but only if you were under the
cloud. There are still pockets that didn’t receive much
rain. Prices still appear bullish.
XXSales of farm and ranch land during the past three
months have been virtually nil. Drought in our trade
area has almost precluded any trades.
XXThere are no dryland crops in the area. There were
a few isolated drip-irrigated and pivot-irrigated cotton crops hailed out in mid-August. We have received
timely rains over the last three weeks, and the temperature needs to stay warm to allow our cotton to
continue to mature. Irrigated corn in the area looks
good as well and should be in the 175-bushel range.
Cotton is expected to make in the 2.5-to-3.5-bale
range. Irrigated crops are satisfactory at this time.
Region 3 • Northern Low Plains

XXOur area is currently still in a drought. Dryland

crops are in poor condition. Irrigated cotton and
peanuts are finishing up. Peanut and cotton harvests
are about to begin. Pasture conditions are fair where
there have been showers, but the majority are in
poor condition. Many calves have been sold earlier
than normal.

XXWe have had good rainfall recently. We are going
into fall in good shape. We should have wheat pasture this year. For the most part, things are looking up.

M E X I C O

Region 4 • Southern Low Plains

XXRecent rains have improved moisture conditions, XXNinety percent of dryland cotton has failed due to

but it has been too late for dryland crops, which are
nonexistent from drought. Low commodity prices
are making it a challenging year to reach profitability. Late rains have resulted in abundant late grass,
but most stocking of livestock has been extremely
light throughout the summer months. Overall dry
conditions over the past quarter have resulted in decreased agricultural loan volume.

12
N E W

drought. MPCI (multi-peril crop insurance) loss payments will be large. We are seeing continued cattle
liquidation due to drought. Tank water is getting very
low or is gone. Hay prices are high with tight supplies.
Wheat planting has started in areas where some rain
has fallen. Operators are being very cautious until
good general rain comes. Pastures are in very poor
shape going into the winter.

Region 5 • Cross Timbers

XXWe recently received good rain in the area. Ranchers had been selling cattle. Hay prices are up due to
dry weather and short supply.
XXRain has finally come in the last few days to much
of our area after a dry and hot summer. Hopefully, this
will help with the hay shortage we are experiencing,
and pastures can recover and provide some good fall
grazing. Also, conditions for planting wheat and oats
improved tremendously.
XXWe have had a very dry and hot spring and summer. Stock water is a problem for many.
Region 6 • North Central Texas

XXA dry July and August hurt hay production.
XXWe are trying to move somewhat away from ag-

riculture due to weather and risk. We are seeing a
higher demand for real estate loans. We have had
some beneficial rainfall in the last 10 days. We are
hoping for one to two more cuttings of hay.

XXA small tract of unimproved land, 15 acres, sold for
$6,500 per acre recently.
Region 7 • East Texas

XXLast quarter was one of the driest ever recorded.
Hay production was almost nil and was in high demand. Some calves were shipped early to give cows
and pastures some relief. Corn harvest was average
to good as was milo. Cotton continues to look like a
good to average crop with very good prices. Rains
as of this date may hurt cotton production, but it is
too early to know. Good overall rains across this area
should help hay producers with late cuttings.

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

Regions of the Eleventh
Federal Reserve District

Region 8 • Central Texas

XXThe big thing right now is finding hay and getting
rain. Ranchers have already started feeding old hay
left over from last year, with everyone hoping for rain
to make a fall crop. Hay will be in short supply. Rain
is happening every day around places, but no big
general rain has come yet, and the small showers
are not helping at this time. If we don’t get a wet fall,
it could be hard times for a lot of ranchers going into
the winter months. Calf prices are still holding up well
at local sale barns despite the large amount of cattle
coming into the barns every week. Oil and gas fracking continues in the area, with several rigs still active
in drilling as well. We are praying for rain.
XXAfter a protracted dry spell put our area in a
drought zone, we have received some beneficial rains
with the promise of more. Hay and cattle producers are now worried by the onset of the armyworm.
Cattle and oil prices seem to be holding steady.
Region 9 • Coastal Texas

XXThere still is some lingering impact caused by
Hurricane Harvey and the cold, wet winter on the
cattle and pastures, but conditions appear to be getting better. The rice crop appears to be good but with
less-than-desirable prices.
Region 11 • Trans-Pecos and
Edwards Plateau

XXSome areas of the Edwards Plateau received
welcome rainfall in the last quarter, but most areas
remain behind the average for the year. As always,
rain and prices dictate what kind of year agriculture
will enjoy. Thus far, prices for cattle, sheep and goats

Table 1

Rural Real Estate Values—Third Quarter 2018

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

105

1,901

5.7

Texas*
1 Northern High Plains

91
10

1,921
940

5.8
–0.3

2 Southern High Plains

735

–2.9

3 Northern Low Plains*

845

–4.6

4 Southern Low Plains*

1,040

8.1

5 Cross Timbers

1,744

4.5

2,963

9.7

7 East Texas*

2,749

0.0

8 Central Texas

3,552

9.8

9 Coastal Texas

2,500

15.6

10 South Texas

2,300

4.5

11 Trans-Pecos and Edwards Plateau

2,313

5.7

12 Southern New Mexico

6
8

417
2,731

3.3
4.0

6 North Central Texas

13 Northern Louisiana

Cropland—Irrigated
District*

2,495

0.7

have remained fairly strong despite a few recent
slumps in the calf market. Mohair prices are good,
wool sales have been from good to strong, and lambs
and kids have sold very well through the summer.
Things could be worse than they are at this time. All
we need is more rain!

Texas*
1 Northern High Plains

2,205

–0.4

2,035

–4.4

2 Southern High Plains

1,650

–4.8

3 Northern Low Plains*

2,413

2.7

4 Southern Low Plains

1,300

–3.9

5 Cross Timbers

XXRecent rains have really turned the pastures (and

2,670

0.0

6 North Central Texas

3,175

10.9

7 East Texas

2,913

0.0

8 Central Texas

3,919

6.3

9 Coastal Texas

2,500

33.3

10 South Texas

2,950

3.2

11 Trans-Pecos and Edwards Plateau

3,165

7.6

12 Southern New Mexico

3,756

7.6

13 Northern Louisiana

4,094

–1.4

116
100

1,880
2,250

5.6
5.5
–4.3

producers’ attitudes) around. Pastures are recovering nicely, and with the mostly general rains the first
week of September, should be good going into fall
and winter. There is even some talk about increasing
livestock numbers, with prices now lower than earlier in the year. With continually increasing expenses,
the challenge is to increase margins and profitability.
Predators remain a problem, particularly in sheep and
goat operations.

Region 12 • Southern New Mexico

XXPrecipitation has been extremely spotty this year;

thus, many producers are experiencing differing
challenges even though they are close to each other
geographically. It appears that most ranchers in our
area made it through the summer without having to
decrease their herds. Likewise, some dryland farmers
are reporting potential bumper crops of milo, while
others are not sure theirs will make it to harvest. All in
all, though, the farm economy has been pretty stable.

XXCorn silage harvest is currently underway, with

yields on irrigated production good considering the
dry weather. Livestock prices are highly variable, but
there is supportive pricing for cow–calf producers
with livestock feedlot performance in the red. Recent
general rains will let most farmers sow their winter
wheat. Dairy margins are tight, with no immediate
relief in sight as production levels remain high.

Ranchland
District*
Texas*
1 Northern High Plains

685

2 Southern High Plains

707

7.4

3 Northern Low Plains

836

–8.7

4 Southern Low Plains*

1,110

1.0

5 Cross Timbers
6 North Central Texas

9
16

1,928
2,963

5.7
4.9

7 East Texas

2,736

–4.9

8 Central Texas

6,000

15.1

9 Coastal Texas

2,620

12.8

2,400

4.2

2,121

5.4

12 Southern New Mexico

278

10.7

13 Northern Louisiana

2,294

2.9

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.

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

Figure 2

Figure 3

Q3 2018 dollars per acre
Irrigated
2,600
2,400
2,200
2,000
Dryland
1,800
1,600
Ranchland
1,400
1,200
1,000
800
600
400
200
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Q3 2018 dollars per acre per year
60

Real Land Values

Real Cash Rents
Irrigated

120

100

Dryland

60
20

Ranchland

10
0

NOTES: 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

Q3 2018 dollars per acre per year
140

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

NOTES: 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*

6.17

6.30

6.24

5.93

6.24

6.29

6.25

5.99

2018:Q1

6.41

6.51

6.28

6.10

6.55

6.57

6.50

6.24

6.74

6.84

6.64

6.36

2018:Q3

pUp

Stable

qDown

12.6

13.0

15.1

82.8

2.1

What change occurred in credit standards for agricultural loans at your bank in the past three months
compared with a year earlier?†
2018:Q2

2018:Q3

pTightened

Same

qLoosened

11.1

11.5

12.3

86.9

0.8

Credit standards

Fixed (average rate, percent)
2017:Q3

Index
50

Credit standards †

30
20
10
0
-10
-20

Variable (average rate, percent)

Anticipated trend
in farmland values*

-30

2017:Q3

5.92

5.96

5.95

5.64

5.91

5.93

5.97

5.65

2018:Q1

6.18

6.17

6.04

5.75

6.25

6.28

6.23

5.90

6.48

Percent reporting, Q3

2018:Q2

6.43

6.02

Federal Reserve Bank of Dallas

-40
-50

2011

2012

2013

2014

2015

2016

2017

2018

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

†

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
Sept. 4–12, and 132 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, 214–922–6532.
Agricultural Survey • Third Quarter 2018 • Federal Reserve Bank of Dallas

Full text of Agricultural Survey : Third Quarter 2018

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