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Central IA & NW IA | I don't post on here much, am mainly just a reader. But in my day job, I lead a team of ag lenders who work all across the corn belt. What we are seeing this renewal season is a similar ratio to what Reality speaks is seeing.
Couple comments:
First, in almost every deal that we see that has lost money, it can be attributed almost entirely to not getting their 22 open grain marketed for the price that they had it valued at on last years statement. The 23 crop on its own is/was more of a break even deal.
Second, even among that group of operations that lost money, working capital is quite strong. Decreased from last year, but strong. Through the year 23, our percentage drawn on Lines of credit was the smallest I've ever seen in my 30 years of lending money, so guys had some strong cushion. But they used some of it up and will be borrowing more in 24. Really only have had one sizeable operation so far with a significant negative working capital situation. This operation was in an area where drought reduced yields, and they went crazy with CAPEX. $4 million Line of credit, and when we started asking some tough questions, they found a local/regional bank to take them on with no problem at all.
Third, projections for 2024 are break even ish. At least among our customer base. Assuming no further price deterioration from today.
Another thing that we as lenders forget at times. We are only looking at operations that actually borrow money. There are A LOT that don't. Or if they do borrow its only on land purchases, never operating. These guys will be there to pick up the pieces if things get tough. Remember, Iowa States last numbers showed that over 80% of the tillable land in Iowa has no mortgage on it. | |
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So Met With The Banker Again
