Smith said the farm-lending system is "safe and sound" but officials are "very concerned and closely monitoring some weakening in credit quality." At a subcommittee meeting, he also compared the current economic climate to that of the early '80s, "citing economic trends like falling farm income, rising debt-to-asset ratios and concerns about the value of farmland," Ryan McCrimmon reports for Politico's Morning Agriculture. "Farmland values remain largely stable across the country. But that could change, Smith warned in his written remarks to the committee, if larger amounts of farmland go up for sale — like if farm bankruptcy rates continue ticking upward." Smith also noted the role of trade wars in agricultural instability in the late '70s and early '80s.
Meanwhile, abnormally wet weather continues to slow harvests, making it likely that some crops won't be harvested this year at all. "Instead, a good deal of corn in Northern states will likely have to wait until the spring of 2020 to be harvested, while soybeans left over winter might not be harvested at all," Ray Grabanski reports for Successful Farming. "That is going to lead to harvest losses much greater than factored so far into USDA numbers" estimating production.
Within the next two weeks, the corn harvest will be about 76 percent complete and soybeans 91% complete. It's not likely to go much higher, Grabanski writes: "Most of the corn not harvested never made maturity, and therefore is still very wet (25% to 35% moisture) and it is not economical to harvest now (and no propane is available to dry it)." And very wet soil, or snow, will block soybean harvests. But, Grabanski notes, China is buying more soybeans, so commodity prices could go up quickly if the trade war ends.
Almost three-quarters of the rural bankers surveyed for Creighton University's Rural Mainstreet Index reported negative economic impacts from the trade war. The RMI is a monthly survey of bank CEOs in rural areas of a 10-state region where agriculture and energy are essential to the economy: Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.
The overall index has been barely above growth-neutral for three of the past four months, buoyed by higher grain prices and trade bailout payments, writes Ernie Goss, the Creighton economist who compiles the report. However, prices for land continued to slide. "The confidence index, which reflects bank CEO expectations for the economy six months out, slumped to 36.5 from September’s 42.9, and continues to indicate a very negative economic outlook among bankers," Goss reports. This is because of the trade war with China and uncertainty about when or if the U.S.-Mexico-Canada Agreement, replacing the North American Free Trade Agreement, will pass.
One banker complained to Goss that it was hard to make predictions because this year's planting and harvesting data isn't known -- or, if known by the Agriculture Department, isn't being made public.
Because of the delayed harvest, USDA is granting most farmers a second extension on crop insurance premium due dates, Dan Looker reports for Successful Farming. Normally, payments on spring-planted crops are due Sept. 30 and begin to accrue interest Oct. 1. USDA announced in August that it would defer interest until after Nov. 30; now it says farmers have until Jan. 31 to make interest-free payments on crops planted last spring. But if their payments are even a day late after Jan. 31, they'll be charged the retroactive interest that would have accrued since the original due date of Oct. 1.