US farmers seek bank loan renewals and extensions

Stubbornly low grain and livestock prices are driving US farmers to seek extensions and renewals of bank loans, states a quarterly farm economy report from the Federal Reserve Banks of St Louis and Kansas City.

However, while US farmer demand for loans is rising, access to credit tightened in the fourth quarter of 2015, and is expected to continue to be squeezed this year, as the rate of farmers repaying existing lines of credit slows and land values fall, state the banks’ two surveys, seen by Reuters.

The findings come as the US farm economy continued a downward slide in the fourth quarter.

A strong dollar, sluggish export demand, and a glut of grain have kept bearish clouds over the sector and dragged down wheat prices to nearly six-year lows.

The US agriculture department projected earlier this week that farm net incomes in 2016 would drop to $54.8bn (€48bn), down about 0.3% from a year earlier.

These low crop prices are squeezing cropland values, according to both banks’ surveys.