Friday, May 18, 2018

"Rural Mainstreet Index at Highest Level in Almost 5 Years: Rising Regulatory Greatest Banking Challenge "

Ag commodity prices are the base of the pyramid, when they are up the whole sector is up.

From Creighton University, May 17:
May Survey Results at a Glance:
* For a fourth straight month the overall index rose above growth neutral.
* On average, bankers expect farm loan defaults to rise by only 3.0 percent over the next 12 months.
* Over the past year, average annual cash rents on farmland declined by 3.0 percent to $239 per acre.
* More than one-third of bank CEOs identified rising regulatory costs as the top economic challenge to their banking operations over the next five years.

OMAHA, Neb. (May 17, 2018) – The Creighton University Rural Mainstreet Index climbed above growth neutral in May for a fourth straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. This is the first time since the July 2015 that we have recorded four straight months of overall indices above growth neutral.  

Overall: The overall index rose to 56.3, its highest level since July 2013, and up from 53.5 in April. The index ranges between 0 and 100 with 50.0 representing growth neutral.
“Surveys over the past several months indicate the Rural Mainstreet economy is trending upward with improving, and positive economic growth. While agriculture commodity prices have improved recently, prices remain below breakeven for a large share of grain farmers,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

More than one-third, or 36.4 percent of bank CEOs identified rising regulatory costs as the top economic challenge to their banking operations over the next five years.

Farming and ranching: The farmland and ranchland-price index for May declined to 42.2 from April’s 42.9. This is the 54th straight month the index has fallen below growth neutral 50.0.
Bankers were asked the average cash rent per acre of farmland in their area. On average, bankers reported $239 per acre which is down by approximately 3.0 percent from this time last year.

According to Lonnie Clark, president of the State Bank of Chandler in Chandler, Minnesota,  “Late planting due to late snow melt and wet conditions.”

On the other hand, Jim Eckert, CEO of Anchor State Bank in Anchor, Illinois, reported, “Planting is behind schedule and the area is very dry.”

The May farm equipment-sales index climbed to a weak 43.8 from April’s 37.8. This marks the 57th consecutive month the reading has moved below growth neutral, 50.0.

Banking: Borrowing by farmers expanded for May as the loan-volume index rose to 74.3 from 68.7 in April. The checking-deposit index plummeted to 43.9 from April’s 56.0, while the index for certificates of deposit and other savings instruments sank to 40.9 from 45.3 in April....