Strength in farm real estate values persisted in the second quarter of 2023 despite some moderation in the farm economy and higher interest rates.
The Kansas City Federal Reserve says growth in farmland values eased from the surge in recent years but remained strong through the first half of 2023. Broad strength in farm finances during recent years throughout the district continued supporting agricultural credit conditions.
Margins for many commodities have thinned in recent months alongside elevated production costs and softening prices. Farm loan performance remained historically strong through early 2023, and liquidity levels at many agricultural banks were well-positioned to meet growth in lending demand that could be on the horizon.
Farm incomes moderated in all the participating Districts during the second quarter. Following almost two years of considerable strength, improvement in farm income waned according to Federal Reserve Surveys of Ag Credit Conditions. Loan demand remained subdued despite moderating incomes.
Source: NAFB News Service.