Southern Plains Economic Conditions Weakening

Extremely dry conditions are putting a strain on the Fed’s Eleventh District. Ag bankers responding to a third-quarter survey report overall weaker economic conditions because of drought that’s pressuring agricultural production. The cotton crop and pastureland are especially hurting because of a lack of moisture. “The Southern Plains cotton crop is a disaster,” one survey participant says. “Almost all dryland crop has already been abandoned because of drought, and the irrigated crop still standing is pitiful.” Ag loan demand decreased during the third quarter of this year, the third-straight drop in the past three quarters. Loan renewals or extensions fell for the seventh-straight quarter, but the rate of loan repayments increased. Loan volume decreased for all categories compared with last year. Ranchland and dryland values rose during the quarter, while irrigated cropland values were steady. Cropland, dryland, and ranchland values increased the most in Texas, rising at least 10 percent year-over-year.

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