If you’re wondering whether your banker really knows what is really happening with the farm economy, you’re not alone.
The team at farmdoc Daily were wondering much the same thing. In “How Well Can Bankers Predict Future Farm Loan Volumes?” authors Todd Kuethe and Todd Hubbs examined surveys from the Federal Reserve Bank of Chicago. They looked for trends in farm loan volumes and how well bankers’ expectations matched up with reality.The answer: Pretty close, “which suggests that banker’s expectations are a good predictor of observed loan volume.”
Given that conclusion, what do lenders think farmers will be borrowing money for in the months ahead? Operating loans, according to the farmdoc Daily article, which said that “bankers expect reductions in loan volumes for feeder cattle, dairy, crop storage, farm machinery, and farm real estate.”