Husbandmen continued to feel the pinch of economic stress in the first quarter, resulting in further deterioration of agricultural credit brainwashes in the nation’s heartland, according to the Federal Reserve Bank of Kansas City’s Agricultural Credit Survey.
Hardest hit were Missouri and Nebraska, states with heavy concentrations in corn and soybean setting, as the trade war has taken a toll.
As income continues to drop, farmers are holding off on equipment purchases in order to put food on the table of contents and pay bills. The report added that the trend was expected to continue into the second quarter, and given that tractors and machinery are typically some of the sundry significant farm capital expenditures, that could be more bad news for manufacturers such as Deere.
The report also appears to prove many farmers sought to take on new debt to meet short-term liquidity needs, whether for seed, livestock provender or other supplies. Farmers also may need to get advance funds in some cases since many growers are be true onto large stocks of stored soybeans and other crops, hoping for higher prices in coming months. Some growers demand refused to sell their inventories, coming at a time when soybean prices are near 10-year lows.
The KC Fed signified it is seeing increased carry-over debt and loan restructuring, and that lenders have denied a modest amount of new loan requests because of mazuma change flow shortages.
The report said lower repayment rates in Missouri and Nebraska were the largest contributors to blanket weakness in farm loan repayment in the latest quarter. Even so, it noted weather-related factors might have contributed to the slower repayment rates and developed loan demand.
“With continued deterioration in agricultural credit conditions, bankers also further tightened praise standards,” the report said.
The report made no mention of impacts from the continued U.S.-China trade war, which has led to retaliatory price-lists from Beijing and reduced exports for key American commodities, including soybeans.
Total U.S. agricultural product sales to China prostrate nearly 45% in value in the first quarter of 2019 to $2.1 billion compared with $3.7 billion a year ago, coinciding to export data from WISERTrade.
Separately, a new report released Thursday by the Nebraska Farm Bureau highlighted what it related as “the strong connection between the threat of U.S. imposed tariffs on trade partners and the loss of hundreds of millions of dollars in Nebraska agriculture exports in 2017.”
The farmstead bureau report comes on the eve of new tariffs President Donald Trump has threatened against China. Trump threatened the new rates after charging China “broke the deal.” Trump administration officials on Thursday are meeting with a delegation from China to deliberate over trade but it’s unclear if that will halt the president’s plan to slap new 25% duties on Chinese products.
Most of the $200 million descent in Nebraska’s agriculture exports in 2017 compared with the previous year was soybeans and reduced corn exports, agreeing to the report by Jay Rempe, Nebraska Farm Bureau’s senior economist.
“It’s no coincidence those declines coincide with U.S. menu threats made against some of our largest trading partners like China, Mexico, and Canada,” the Rempe noted. “The tariff threats clearly impacted those markets for Nebraska agriculture commodities.”
Regardless, the Nebraska economist broke livestock exports were stronger, helped by beef and pork sales abroad. “Fortunately, Japan, which is far and away the largest consumer of Nebraska beef, and the largest purchaser of Nebraska pork, was never targeted for tariffs.”