Bank CEO sentiments improved this month but remained relatively low as economic pessimism remains, according to Creighton University’s January Rural Mainstreet Index. The index fell below the growth-neutral mark of 50 for the 16th time in the past 17 months, rising to 42.3 from 39.6 in December.
The economic growth outlook remained weak. January’s confidence index increased to 42.3 from 37.5 in December. “Improving, but still weak agriculture commodity prices and negative farm cash flows, combined with downturns in farm equipment sales over the past several months, continued to push banker confidence below growth-neutral,” said Ernie Goss, chair in regional economics at Creighton University.
Farmland prices fell for the eighth time in the past nine months in January, to 42.0 from 41.3 the previous month. Bank CEOs expect annual cash rents of $278 per acre of non-pasture, non-irrigated farmland. “Elevated interest rates and higher input costs, along with below breakeven grain prices for some farmers in the region, have put downward pressure on ag land prices,” Goss said.
The index for farm equipment sales remained extraordinarily low, rising to 17.4 from December’s eight-year low of 14.3. The index has been below 50 for 18 straight months. Bankers on average expect one in five grain farmers will have negative cash flow for 2025. One-third of bank CEOs recommend the Federal Reserve keep interest rates at 4.25 to 4.50 percent this year.
According to the International Trade Association, regional exports of agricultural goods and livestock increased $673.4 million or 6.2 percent to $11.6 billion for the first 11 months of this year.
The farm economic outlook remained weak for the first half of this year despite the one-year extension of the farm bill and nearly $21 billion in farm disaster relief, Goss said. “However, grain prices have recently improved, but not enough for profitability for many producers,” he said. “On the other hand, regional livestock producers continue to experience solid prices, thus maintaining profitability.”
Other report findings included:
- January’s loan volume index fell to 60.0 from 69.6 in December, and the checking deposit index increased to 48.0 from 47.8 the previous month. The index for certificates of deposit and other savings instruments increased to 58.0 from 50.1 amid favorable Federal Reserve interest rate policies.
- The index for home sales fell to 40.0 in January from 43.5 in December. The regional retail sales index fell to 44.0 from 52.1 the previous month.
- The new hiring index increased to 47.9 from 45.7 in December.