KANSAS CITY, Mo. (RFD-TV) — Farm loan repayment conditions remained weaker than a year earlier during the third quarter, but the pace of deterioration slowed as higher crop prices improved returns for some row-crop producers.
The Federal Reserve Bank of Kansas City says its farm loan repayment diffusion index reached 82 during the quarter. A reading below 100 indicates repayment rates remained weaker than a year earlier, although conditions improved from the previous quarter.
Corn prices increased 8% from the second quarter, while soybean prices rose 7.4%. The bank says those gains helped improve profitability for row-crop producers despite continued pressure from higher operating expenses.
Diesel costs remained a significant burden, limiting some of the benefit from stronger commodity prices. Farm financial stress therefore remained moderate rather than disappearing, with repayment performance still below year-earlier levels.
Producers and lenders will be watching whether recent grain-market weakness changes that trend during the fourth quarter as harvest advances and operating costs remain elevated.
