Texas Federal Reserve Reports Improved Ag Conditions

Eleventh District agricultural bankers responding to a Federal Reserve fourth-quarter survey last month, reported improved conditions across most regions.

The Eleventh Federal Reserve District includes Texas, northern Louisiana and southern New Mexico.

Crop yields have been good, particularly for corn and cotton, the survey showed.  However, some areas reported problems with the harvest because of excessive moisture.

Respondents noted that farm-gate prices generally were weak, particularly for cattle.




The agriculture survey found that demand for agricultural loans overall declined for a 13th straight quarter, the Federal Reserve Bank said.  Loan renewals and extensions decelerated, and the rate of loan repayment declined after flattening in the third quarter.

Loan volume fell across all major categories, compared with a year ago, with the sharpest declines in dairy, farm machinery and feeder cattle loans.




The Federal Reserve update also said district cropland values had ticked up in the latest quarter, while ranchland values declined.

Responding bankers in the fourth quarters of 2018 and 2017 said Texas nominal cropland and ranchland values increased year over year.

Southern New Mexico respondents said there was an increase in irrigated cropland and ranchland values but a decline in dryland values.  Northern Louisiana respondents reported an increase in cropland and ranchland values.




Interest rates rose last quarter on all loan categories, the bank said.  They also increased in each quarter for all loan categories.

Fixed rate interest rates for loans on feeder cattle rose steadily through 2018, averaging 6.88% in the fourth quarter last year from 6.24% in the 2017 quarter, the bank said.

Fixed rates for long-term farm real estate loans rose to an average of 6.58% during the fourth quarter of 2018 from 5.99% in the same quarter a year earlier.

Fixed rates for intermediate term loans were reported in fourth-quarter 2018 at 6.78%, compared with 6.25% a year earlier.

And interest rates for other farm operating loans were listed in the fourth quarter at 6.95%, up from 6.29% in the fourth quarter of 2017.




Bankers commented in the surveys that agricultural land values and credit conditions included some that said yields and prices were not good enough to cover the high cost of inputs.

Comments also came in that farmland values were holding up better than expected when considering the downward turn in commodity prices, the Federal Reserve Bank said.  This appeared to be based on a lot of optimism that the markets would return and that trade relations would improve.




The Federal Reserve Bank of Minneapolis published an update that said the South Dakota economy has been sluggish, mostly because of a slump in the farm economy.

But that also depends on geography.  Sioux Falls, the largest city in the Dakotas, has seen steady growth for some time, while Rapid City has seen less-rapid growth.

The Minneapolis bank explained that the South Dakota economy is tied very closely with agriculture.




Cash cattle traded last week at $123 to mostly $124 per cwt on a live basis, up $1 from the previous week and at $195 to mostly $197 on a dressed basis, up $1 to $2.

The USDA choice cutout Friday was down $1.50 per cwt at $212.46, while select was off $1.50 at $206.27.  The choice/select spread held steady at $6.19 with 71 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Thursday, was $145.46 per cwt, down $0.09.  This compares with Friday’s Jan settlement of $146.12, down $0.62.