Is the agricultural economy troughing?
The answer is no.
As Hedgeye Commodities analyst Ben Ryan points out, the trends in the farm credit cycle are disconcerting to say the least. Below are four charts and brief analysis from Ryan as a follow-up to "Credit Drought: A Weary Road Ahead For The Ag Sector." (You can follow him on Twitter @Hedgeye_Comdty.)
As you may have guessed, all is not well on the farm.
"According to the Kansas City Fed, more than 30% of financial institutions reported increasing collateral requirements for farmers in Q1."
"Bankers noted greater than 18% of loans made to farmers in Q1 involved restructuring existing debt to meet short-term liquidity needs."
"In Q1, farm real estate accounted for 22% of collateral on non-real estate loans greater than $250K, up from 13% two years ago."
"So according to Farmer Mac, every single Ag. related commodity is 'low.' I'd be begging for bottom too."
Here's a key takeaway from a recent Bloomberg story:
"The USDA has forecast farmer income will drop to $54.8 billion this year, the third straight decline and less than half of the record profit earned in 2013. The ratio of debt to income has more than doubled in three years to 6.8 percent, the highest since 1984, when the Midwest was mired in a farm crisis that saw the highest foreclosure rates since the Great Depression."