Texas/southern New Mexico bankers report dryland cropland, irrigated cropland and ranchland values increased versus a year earlier as of June 30, reports the Federal Reserve Bank of Dallas. The quarterly survey lists a 4% annual gain in the value of ranchland across both Texas and the bank’s district, which includes southern New Mexico and northern Louisiana. The bank says the value of dryland cropland rose 3.2% on an annual basis for Texas and 2.9% for the district. Irrigated cropland rose 2.8% annually across Texas and 1.9% for the district.
Looking at land values on a quarterly basis, the survey finds irrigated cropland and ranchland values increased this quarter, while dryland values were flat. The banks’s anticipated trend in farmland values index fell in the second quarter 2020, suggesting respondents expect farmland values to decrease.
Survey respondents report overall weaker conditions across most regions of the bank’s district. They note dry conditions are putting a strain on ag production despite some rainfall in late May. In addition, respondents noted low commodity prices are an area of concern. “Although beef prices are sky high at the supermarket, little of that increase has found its way to the producers, who still struggle with increased input costs and uncertainty in the weather,” one survey participant said.
Demand for ag loans continued to decline, the banks reports, with the bank’s loan demand index registering its 19th quarter in negative territory. Meanwhile, loan renewals or extensions increased while the rate of loan repayment continued to decline. Loan volume fell across all major categories compared with a year ago. The bank adds its credit standards index rose, indicating further tightening of standards.