After taking a dip in May, the Rural Mainstreet Index (RMI) is back above growth neutral. The monthly survey of bank CEOs in a 10-state Midwest region is at 53.2 for June 2019, which is up from 48.5 in May.
This is the sixth time in the past seven months that the index has risen above growth neutral. The index ranges between 0 and 100 with 50 representing growth neutral.
“Higher agriculture commodity prices and rebuilding from recent floods boosted the Rural Mainstreet Index (RMI) for the month,” says Ernie Goss, who chairs Creighton’s Heider College of Business and leads the RMI. “Furthermore, despite the negatives from the trade war, 69.4% of bankers support either raising, or continuing current tariffs.”
Farmers have been faced with challenges of late planting and extreme weather, bankers report. Jeff Bonnett, president of Havana National Bank in Havana, Ill., said it has been estimated that anywhere from 15 to 20 million acres were not planted in corn.
“Based upon this information, corn prices should be in the $5.75 to $6 (or more) a bushel range,” according to Bonnett. “What are we missing? Will the true corn acres planted be revealed after the required certification through FSA due by July 15th?”
Other areas, however, have seen favorable conditions.
“Our specific area within 30-mile radius did not experience the spring rains and all crops are planted and in 80% good to excellent condition, reported Daniel Otten, chairman and CEO of Farmers State Bank in Albert Lea, Minn. “Far better than the rest of Corn Belt.”
For the June RMI, lenders were asked:
Which of the following has been the significant outcomes that you have observed in your area from the farmer financial “crisis,”? (check all that apply):
- Farmer suicide: 3.3%
- Farm loan defaults: 25.8%
- Farm sales or farmer leaving farm: 48.4%
- Economic spillover into community: 41.9%
- None of above or other: 29%
The farmland and ranchland-price index for June is a still weak 44.8. But it is up from May’s 41.2. This is the 67th straight month the index has remained below growth neutral.
The confidence index, which reflects bank CEO expectations for the economy six months out, expanded to 53.3 from May’s abysmal 38.2, indicating a positive, but somewhat weak economic outlook among bankers.