Agricultural credit conditions in the Kansas City Federal Reserve’s Tenth District moderated in the second quarter of 2023, and farmland values continued to increase. Following multiple years of improvement, farm income softened.
Borrower liquidity retracted somewhat alongside continued cost pressures and lower prices for most agricultural commodities compared to last year. Despite some moderation, the District’s farm economy was steady in the second quarter. Drought early in the quarter followed by heavy rains contributed to difficulty with winter wheat harvest and spring planting. Some agricultural bankers commented that decreased grain prices, weather volatility, and stable production expenses could reduce borrowers liquidity that had been very strong during the renewable season.
In the Chicago Federal Reserve’s District, farmland values rose in the second quarter, but it was the first single-digit gain since 2021. The Dallas Fed noted most bankers responded to the second-quarter survey reported overall better conditions in the district.
