A monthly index of the economy in Iowa and nine other Midwestern states weakened in February, based on a survey of bank chief executive officers in rural areas.
The overall Creighton University Rural Mainstreet Index declined to 51.6 in February from 55.9 in January,
“Due to weak farm income, 40.6 percent of bankers reported that their banks had restructured loans while 3.1 percent indicated that their banks had rejected a higher percentage of farmland loans,” said Ernie Goss, the Creighton University professor who supervises and compiles the monthly survey.
“Approximately one-fourth of bankers indicated no change in lending practices.”
Borrowing by farmers remained weak for February. The borrowing index rose to 50.0 from 48.5 in January, which was its lowest level since February 2013.
Bankers were asked what percentage of farmland purchases were cash sales.
On average bank CEO’s reported that 17.3 percent of farmland purchases were cash sales, down from five years ago when bankers indicated 22 percent of farmland purchases were cash sales.
The Rural Mainstreet confidence index, which reflects bank CEO expectations for the economy six months out, increased to a healthy 58.1 from January’s weak 50.
February’s reading is the highest recorded since June 2013.
“The signing of the Phase 1 trade agreement with China and the United States-Mexico-Canada Agreement boosted economic confidence across the region with expectations of higher international agriculture sales,” Goss said.
ARTICLE CONTINUES BELOW ADVERTISEMENT
“The last time Creighton recorded economic confidence this high was when grain prices were double today’s values in 2013.”
The bankers’ expectations reflect a view expressed by global agricultural equipment supplier Deere and Co. in its Feb. 21 earnings report.
“Deere’s first-quarter performance reflected early signs of stabilization in the U.S. farm sector,” Deere CEO John May said.
“Farmer confidence, though still subdued, has improved due in part to hopes for a relaxation of trade tensions and higher agricultural exports.”
Deere, with plants in Ankeny, Davenport, Dubuque and Waterloo, reported net income of $517 million, or $1.63 per share, for the quarter that ended on Feb. 2, up from $498 million and $1.54 per share for the same quarter of the previous year. Net revenues were down 4 percent in the first quarter to $7.63 billion from $7.98 billion a year ago,