Agriculture loans 30 days or more past due or in nonaccrual status were 1.6% of total agriculture loans at U.S. banks and thrifts as of June 30 — the lowest since the 1.5% posted in the fourth quarter of 2016, based on data compiled by S&P Global Market Intelligence.
More specifically, delinquencies for agricultural production loans, which finance things like equipment and seeds, stood at 1.4%, their lowest level since the fourth quarter of 2017 when they were at 1.3% of total agriculture loans. Meanwhile, delinquencies for farm loans, which finance land, were 1.8%, their lowest level since the third quarter of 2016 when they were 1.7%.
Combined agricultural production and farm loans in the second quarter fell by 5.5% year over year to $172.19 billion.
An August newsletter from the Federal Reserve Bank of Chicago noted that the portion of the Seventh Federal Reserve District's agricultural loan portfolio having "major" or "severe" repayment problems, at 2.8%, had not been lower in the second quarter of a year since 2014. The share was significantly lower than the 8.3% posted for the second quarter of 2020, according to the newsletter.
Repayment rates for non-real-estate farm loans in the second quarter improved from the year-ago period, the newsletter reported.
The Seventh Federal Reserve District produces more than 40% of the corn, soybeans and hogs in the U.S. in a typical year, according to the Chicago Fed. The district — which serves a five-state region comprising all of Iowa and most of Illinois, Indiana, Michigan and Wisconsin — is a major dairy and egg producer as well.
According to the newsletter, agricultural credit conditions for the district improved in the second quarter from a year earlier despite COVID-19's impact on rural regions. Citing a survey of 152 bankers in the district, the newsletter reported that 72% of respondents indicated that the pandemic had at least modestly affected their respective lending areas during the past year. But during the same period, the pandemic had negatively affected only 34% of their agricultural borrowers.
In some parts of the U.S., like Oregon and Washington, farmers grappled with the effects of a record heat wave.
"[I]t is a really tough time to be a farmer right now," Oregon Farm Bureau Executive Vice President Dave Dillon said, according to a report from The Oregonian.
Fernando Enriquez Jr., who co-manages a sweet-onion farm in Washington with his father, said they lost roughly 98% of their crop amid the "unprecedented" heat wave, The Seattle Times reported.
Meanwhile, the sixth-largest agriculture lender in the country, South Dakota-based Great Western Bancorp Inc., said crop progress in its footprint for both corn and soybean is tracking well, with Iowa and Nebraska well ahead of national averages.
"South Dakota is experiencing favorable conditions in the southeast and dry conditions in the north and the west," Executive Vice President and Chief Credit Officer Stephen Yose said July 29 during a conference call to discuss results for the quarter ended June 30, according to a transcript. "The [U.S. Department of Agriculture] average farm price for corn is $5.60 per bushel, and for soybeans is $13.70 per bushel, both increases from $4.30 per bushel and $11.25 per bushel, respectively, in the prior quarter, and indicating good margin opportunities for our producers."