Rural Bankers See Slight Decline in Farm Financial Stress

Posted on 07/20/2017 10:47 PM

Rural bank CEOs in 10 Midwestern states see a slight reduction in farm financial stress for the coming year, according to Creighton University's Rural Mainstreet Index (RMI). On average, bankers expect 15.1% of grain farmers to suffer negative cash flows for 2017, an improvement from last year when 19.1% anticipated negative cash flows for 2016, reports survey coordinator Dr. Ernie Goss. In addition, bankers estimated loan defaults of 4.9% over next 12 months, down from the 5.4% predicted last year at this time.

The farmland and ranchland-price index portion of the RMI for July sank to 36.6 from June's 40.0. This is the 44th straight month the index has fallen below growth neutral 50.0, reports Goss.

The RMI, which ranges between 0 and 100, tumbled to 40.7, its lowest level since November of last year, and down from 50.0 in June, Goss notes.

"This is the largest one-month decline we have recorded since November 2008, or in the middle of the national recession, "says Goss. "Drought conditions in portions of the region, combined with weak grain prices, negatively affected economic conditions, and the economic outlook for a large share of bank CEOs this month,"

The July farm equipment-sales index fell to 20.0 from 26.2 in June. This marks the 47th consecutive month the reading has dropped below growth neutral 50.0.

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