Friday, December 20, 2019

Creighton University's "December Rural Mainstreet Index Rises Above Growth Neutral: Farm Land Price Index Highest Since 2013"

From Creighton U's Heider College of Business:
December Survey Results at a Glance:
  • Overall index remains above growth neutral for the 10th time in the past 12 months.
  • For the first time since November 2013, farm land prices advanced above growth neutral.
  • One of nine bank CEOs expect 2020 farm loan defaults to expand by 10% to 20%.
  • On average bankers expect 2020 farm loan defaults to grow by approximately 4.0%, down from an anticipated gain of 4.4% for 2019 recorded last December.
  • As a result of weak farm income, almost two-thirds of bankers reported their banks had increased loan collateral requirements.
OMAHA, Neb. (Dec. 19, 2019) – The Creighton University Rural Mainstreet Index (RMI) for December remained above growth neutral for the fourth straight month and for the 10th time in the past 12 months, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. 

Overall: While the overall index for December fell to 50.2 from 54.2 in November, it marked the tenth time in 2019 that the index has remained above growth neutral 50.0.
“Federal agriculture crop support payments and somewhat higher grain prices have boosted the Rural Mainstreet Index above growth neutral for the month.” 

“Bank CEOs, on average, expect approximately 12.4% of grain farmers to experience financial losses for 2020. However, this is down from last year at this time when bankers projected 15.3% of grain farmers to experience negative cash flows for 2019,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Jeff Bonnett, president of Havana National Bank in Havana, Illinois, reported, “If grain prices remain where they are today, we will have a small percentage of our Ag borrowers struggle with cashflow.”

Farming and ranching: The farmland and ranchland-price index soared to 52.8 from November’s weak 40.4. This is the first time since November 2013 that the index has risen above growth neutral, 50.0.
The November farm equipment-sales index sank to 27.9 from November’s 37.5. This marks the 75th month that the reading has remained below growth neutral 50.0....