Latest WASDE report projects lower grain prices

By Kent Thiesse

As spring planting continues across the Midwest, the nation’s ag bankers can be proud of their 2018 stats. Farmers in the field, however, have cause for concern between adverse weather conditions, continuing trade difficulties with China, and a rise in bankruptcies.

Ag bankers nationwide pulled in $108 billion in loans in 2018, up 5.3 percent, or $5.5 billion. Asset quality remained healthy and non-performing loans stayed at a pre-recession level of 0.52 percent of total loans. More than 94 percent of farm banks were profitable in 2018, with more than 63 percent reporting an increase in earnings.

In the Midwest region, including Minnesota, the 842 farm banks increased farm loans by 5.24 percent to $47.9 billion. Ag production loans increased 3.31 percent and farmland loans rose 6.88 percent. The median return on equity was 9.63 percent, while the median return on assets rose 1.1 percent.

Despite those positive numbers for bankers, farmers are having a grimmer time. The personal income of U.S. farmers declined by an annualized $11.8 billion during the first quarter of the year, the biggest first-quarter drop in 3 years.

Farm bankruptcies are up in the Fed’s Ninth District. They rose 30 percent in six Midwest states, including Minnesota, according to data from the Minneapolis Fed. Nationwide, Chapter 12 bankruptcies were largely flat in 2018 from 2017, but conditions look even less promising this year. Minnesota had 26 last year, on the higher end for the country and above Iowa’s 13, but below Wisconsin’s 49 and almost on par with Nebraska’s 27.

Trump’s ongoing trade war with China took another twist as the President promised to increase tariffs in a pair of tweets on Sunday, possibly stalling out ongoing talks. He continued his Twitter opining on Wednesday, putting the resolution of the talks—and the resulting Chinese tariffs on American ag exports—in doubt.

“Even if the trade war ends, with this oversupply of corn and soybeans and wheat, we’re still going to have low prices,” Sen. Chuck Grassley (R-Iowa), the second-highest ranking member of the U.S. Senate, told Bloomberg.

For additional information email Kent Thiesse, Farm Management Analyst and Senior Vice President, MinnStar Bank, Lake Crystal at kent.thiesse@minnstarbank.com.  
 
To subscribe to BankWise for weekly Ag Lending News updates email Kristi Ploeger or call 651-789-3997. 

Download, print, and display ICBM’s Farm and Rural Helpline Flyer.

7900 International Drive, Suite 685,

Bloomington, MN 55425

Phone: 651.687.9080

Fax: 651.687.9387

info@icbm.org

© 2018 ICBM. All Rights Reserved.

A proud state affiliate of the