The Drought is in Credit: Key Call-Outs (AGU, CF, MOS, POT)

05/17/16 09:03AM EDT

The big question that will be answered in the intermediate-term is the effect of credit contraction, repayment rates, and land values on farmer input consumption trends. As we’ve highlighted with our recent calls in the Ag. space, we believe a deterioration in these metrics will prove meaningful:

  • The Chicago Farm Loan Repayment Index contracted from 43 at the end of Q4 to 32 through Q1 (-44% Y/Y) while the Chicago Fed Farm Loan Demand Index increased to 156 from 134 through Q4 (+11% Y/Y) – The Chicago Fed Fund Loan Availability Index was flat Y/Y.
  • The Kansas City Fed Loan Demand Index (nominal USD) is +6.2% Y/Y through Q1 and the Kansas City Fed Farm Income Index (nominal USD) is -73% Y/Y.
  • The Federal Reserve Bank of Chicago 7th District measurement of farmland values shows that farmland values are down -4% Y/Y, the largest rate of deceleration since Q3 of 2009. Cash rental rates for the 7th district are down -10% Y/Y.
  • Without having received updated data on past due real estate loans secured by farmland, loans 30-89 days past due were up 33% Y/Y through Q4, and there is no evidence to suggest a reversal in this trend.  

The Drought is in Credit: Key Call-Outs (AGU, CF, MOS, POT) - Chicago Fed Credit Indices

The Drought is in Credit: Key Call-Outs (AGU, CF, MOS, POT) - Chicago Fed Farmland Valuespng

The Drought is in Credit: Key Call-Outs (AGU, CF, MOS, POT) - KC Fed Credit Metrics

The Drought is in Credit: Key Call-Outs (AGU, CF, MOS, POT) - 30 89 Days Past Due Real Estate Loans Secured By Farmland

© 2024 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.