Low commodity prices continue to suppress Midwest and Mid-South farm incomes, according to the latest Agricultural Finance Monitor (AFM), which is published by the Federal Reserve Bank of St. Louis.

This index uses a “diffusion index methodology” with a base of 100. In layperson’s terms, this means that any score above 100 means more bankers have reported higher farmer income year-over-year. Conversely, any score below 100 means more bankers have reported lower farmer income year-over-year.

First-quarter results for 2019 reached 46, according to the AFM. That does mark an improvement from 2018’s Q4 value of 41, with some bankers expecting Q2 results to move higher still, to 64.

AFM also tracks farmland values and cash rent trends. Quality farmland values picked up 3.4% in Q4 of 2018 but eased 0.3% lower for the first quarter of 2019, with a steeper decline of 3.3% for ranchland and pastureland values over the same period.

That’s problematic, as one banker from Arkansas noted: “Commodity prices are too low for input costs and rents/land payments.”

Cash rents for quality farmland are on the rise over the past six months, according to AFM – up 2.9% in Q4 of 2018 and another 1.5% in Q1 of 2019. In contrast, ranchland and pastureland cash rents dropped 8% in Q1 of 2019 after moving 1.3% higher the prior quarter.

In the latest AFM survey, bankers were also asked what percentage of their farmer customers had borrowed up to their loan limits. About 31% of respondents said more than half of their customers had done so. Another 35% said less than a quarter of their customers had done so, however.

In another survey question, 62% of respondents said the most significant risk to the farm sector this year is an “adverse trade outcome” with China and other key trading partners.

Results of this survey come from 26 agricultural banks within the Eighth Federal Reserve District, which covers some or all of Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

Farmers as well as bankers are increasingly noticing the pinch of low commodity prices. In a separate ongoing survey – the Ag Economy Barometer, conducted by Purdue University and CME Group – that indicator dropped 18 points in April to reach its lowest levels in six months. Click here to learn more about the latest trends in farmer sentiment over current economic conditions and future expectations.