Creighton Survey Finds Corn Price Tipping Points
Feb 21, 2013
A drop in corn prices below $3. 86 a bu. would threaten farm loan repayments, according to the survey of Midwestern rural bankers conducted by Creighton University's Dr. Ernie Goss. The regular 10-state monthly survey of rural community bankers asked bankers what corn price would put farm loan repayments in jeopardy. In addition, the survey asked bankers the breakeven corn price for farmers that rent their land. On average, bankers estimated that breakeven at $4.84 per bushel.
In his comments included with the release of the monthly Rural Mainstreet Index (RMI) conducted by Goss, he notes: "The University of illinois Department of Agricultural Economics projected 2013 corn prices of $5.73 per bushel. Given this projection along with current strong balance sheets and cash flow of farmers, agriculture repayments and profitability for farmers [in 2013] should be very similar to 2012. Even so, significant changes in Federal Reserve policy or international trade disruptions could pose a threat to the Rural Mainstreet economy in 2013."
In the February update, the RMI, which ranges between 0 and 100 with 50.0 representing growth neutral, climbed to a healthy 58.2 from 55.6 in January. “The February RMI is down only slightly from the reading for February of last year. I anticipate that economic growth for the region will continue on a slow but positive pace,” says.
After peaking at 83.9 in November of last year, the farmland-price index has now declined for three straight months, observes Goss. "While the index declined, it was still strong at 67.0, down from January’s 71.5. This is the 37th consecutive month that the farmland-price index has been above growth neutral. The farm equipment-sales index rose to 65.8 from 63.8 in January. Based on our surveys over the past several months, 2013 is stacking up to be a good year for farm income according to bankers. This is showing up in healthy growth in farmland prices and the sales of farm equipment,” states Goss.
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