The Creighton University Rural Mainstreet Index for July fell from June’s weak reading, according to the monthly survey of bank CEOs in rural areas of a 10-state region within the Midwest dependent on agriculture. After improving four of the last five months, the index, which ranges between 0 and 100, sank to 39.8 from 43.9 in June. This is the 11th straight month the overall index has remained below growth neutral. As a result of weaker farm economic conditions, bankers expect almost one in five crop farmers, or 19.5 percent, to suffer negative cash flows where cash expenses exceed cash revenues for 2016. This month, bankers estimated farmland prices have fallen by six percent over the past 12 months. However, there is a great deal of variation across the region in the direction and magnitude of farmland prices.
This month, bankers were asked to assess the likelihood of loan defaults in their area. On average, farm loan defaults are expected to rise by 5.4 percent over the next 12 months.
Source: NAFB News Service