Chicago Fed Bank Sees Slight Rise in Banker Optimism

Posted on 02/14/2020 9:52 AM

Central Corn Belt ag bankers responding to the Chicago Federal Reserve’s fourth-quarter survey “sounded more optimistic than a year ago,” reports David B. Oppedahl, senior business economist with the bank, who conducts the quarterly survey. The slight gain in optimism comes “even though the results for farmland values mirrored those from the fourth quarter of 2018.”

Overall, there was no annual change in “good” agricultural land values in the district for 2019, he states. District’s farmland values in the fourth quarter of 2019 were essentially the same as a year ago. In the fourth quarter of 2019, Indiana and Iowa saw year-over-year increases in land values of 2%, while Illinois and Wisconsin had annual decreases of 1% and 2%, respectively. He notes Michigan farmland values seemed to be flat, but not enough Michigan bankers responded to provide a conclusive result. The bank district’s farmland values rose 1% in the fourth quarter of 2019 relative to the third quarter.

 

chart of land values change from regions
Federal Reserve Bank of Chicago

After adjusting for inflation, district farmland values eased a little more than 1% on an annual basis in 2019. “In real terms, the decrease in 2019 was smaller than the one in 2018 because of a dip in inflation This was the sixth straight annual real decline,” he observes.

District farmland values fell 13% in real terms from their peak in 2013 to the end of 2019. But the decrease in agricultural land values over this span was just 6% in nominal terms, he adds.

District farmland values adjusted for inflation
Federal Reserve Bank of Chicago

 

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