Agricultural credit conditions in the Seventh Federal Reserve District declined again in the third quarter of 2019. According to David Oppedahl, senior business economist at the Chicago Fed, repayment rates for non-real-estate farm loans were down relative to the third quar­ter of 2018, and loan renewals and extensions were up. Farmland values in the District were down 1% from a year ago, despite signs of strength in some areas.

The Seventh Federal Reserve District covers the northern portions of Illinois and Indiana, southern Wisconsin, the Lower Peninsula of Michigan and the state of Iowa.

Loan Demands Increase

Demand for non-real estate farm loans was higher than a year earlier. Also, for the first time since the second quarter of 2017, the availability of funds for lending by agricultural banks was up for a quarter relative to a year ago, according to the Districts’ November 2019 AgLetter. In line with these results, the average loan-to-deposit ratio for the District edged down to 78.8% in the third quarter of 2019 from 80.2% in the second quarter (its all time high). Average interest rates on agricultural loans moved down during the third quarter of 2019, which aided farm borrowers, said Oppedahl.

Stronger demand for non-real-estate farm loans compared with a year ago was exhibited in the third quarter of 2019. This marked the 24th consecutive quarter (6 years in a row) with such loan demand. Even so, the index of loan demand slipped to 115 in the third quarter of 2019, as…