The February Main Street Index from Creighton University finally slumped into negative territory. The January reading had been slightly above neutral at 50.9, but slumped sharply in February to 46.4. The lowest index readings for the 10 states surveyed was in Nebraska at 44.4 with Minnesota slightly ahead at 44.6. The best reading was for North Dakota at 53.7 which was the only state still above 50.
Weaker exports primarily due to the West Coast port situation and lower energy and farm prices continue to weigh on the farm economy. The farmland and rangeland index remained weak at 39.4. Even though it appears crop prices have stabilized, farmland values continue to fall at about a 6-8% annualized basis. The index has remained below the neutral 50 level for 15 consecutive months. Still more than 20% of farmland sales are for cash, so there is still a fair amount of farm liquidity out there.
The farm equipment index dropped a full 10 points from 29.5 to 19.5. Over 60% of the bankers surveyed expected farm equipment sales to be down more than 15% for the rest of this year. A review of farm equipment manufacturers appear to reflect these same numbers.
February loan volume for rural bankers fell from an index of 62.1 to 46.4. With most cash rents being due on March 1, there may be several farmers not getting necessary operating capital to farm higher cash rent ground. We have heard several rumors of this happening and if price stay low, this trend will accelerate.
We know that Agriculture is not as profitable as it was a few years ago and this index reflects those conditions.