Used car prices remain historically high. “Most customers have reduced their cattle herds due to drought and feed."Extra diligence, patience and research is more critical now than ever for used-car shoppers" - Joseph Yoon, analyst The drought in our area is by far the biggest obstacle at this time.” Northwest Oklahoma “Grain prices helped offset higher inputs but that could change if markets don't hold. “Increasing interest rates and dry conditions are stressing agriculture credit.” – Southwest Oklahoma Any farmer with a loss in 2022 was due to drought and crop insurance helped cover some of it.”– Southeast Nebraska “Farmers are sitting well on working capital. “The biggest concerns are lack of moisture, higher interest rates, lower commodity prices, and higher input costs.”– Northeast Nebraska Higher interest rates will adversely affect 2023 profitability.”– Southwest Nebraska “Most operators lost working capital in 2022, but earnings were mixed. “Rising interest rates will continue to have a significant negative impact on loan volume and capital investments by farmers and ranchers.”– Northwest Missouri “With higher interest rates on operating lines, farmers are selling carry over grain earlier in the year and using the proceeds to pay for inputs instead of using credit.”– Southwest Missouri “Rates are beginning to get more consideration as farmers contemplate their needs and wants and loan costs.”– Central Missouri It is also causing higher priced cattle for those buying cattle.”– Northcentral Kansas “The limited amount of moisture is causing higher feed prices for cattle producers. “Rising interest rates are affecting farmland values and drought conditions will cut wheat production this summer.”– Southwest Kansas Crop insurance has carried the current borrowers.”– Northwest Kansas “If drought continues then operators will probably have carryover debt. “Cattle markets are trending upward and hay stocks continue to be a regional and nationwide issue.”– Northeast Wyoming “The rise in interest rates is having a significant impact on farm borrowers”– Northeast Colorado Farm profits are high with commodity prices, but livestock operations are not experiencing that level of profitability.” – Northern Wyoming “We expect a difficult year as a result of the increase in input costs. Farm loan interest rates climbed alongside increases in the federal funds rate and other key benchmarks and pushed credit expenses up considerably. The average rate charged on agricultural loans was about 30 basis points higher than the previous quarter and nearly 300 basis points higher than a year ago (Chart 1). Interest Rates and Farmland Valuesįarm loan interest rates rose alongside further increases in benchmark rates. Financial performance and liquidity at agricultural banks remained solid and farm lenders appeared well-positioned to meet higher credit demand through the early months of 2023. Higher production expenses pushed many producers to increase lines of credit, but others also pursued cost-cutting measures or utilized cash to reduce financing needs, dampening loan demand at many banks. Elevated production expenses, higher interest rates and drought continued to present headwinds for many producers, but current commodity prices kept profit opportunities within reach. farm economy in 2023 remained favorable as prices of key commodities were at multi-year highs. While improvement in farm finances and credit conditions steadied and some lenders expected a degree of deterioration in the months ahead, multiple years of strong incomes continued to keep credit stress low. Farm income moderated alongside a slight pullback in commodity prices during the first quarter slowing the pace of increase in loan repayment rates. Strength in farm real estate markets eased, but farmland values continued to increase despite downward pressure from higher interest rates. Agricultural credit conditions in the Tenth District remained strong and farm real estate values continued to increase, but growth has softened.
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