Slippage in the credit quality of agricultural loans was reported in some areas of the district. Banks are reportedly responding by increasing their reserves for loan losses. Banks in some areas are also reportedly tightening credit due to adverse agricultural conditions. Profitability is expected to be consistent with 1997 performance, mostly due to very strong first and second quarters in 1998. Agriculture Agriculture remains financially stressed.
Prices are low for most Ninth District farm products except milk.
But preliminary responses to a Minneapolis Fed fourth quarter survey of ag bankers reveal some hope that October upticks in grain prices bode well for improvements in their customers' income and spending. With all the harvest in, the 1998 crop was record setting for most farmers. High output and slow sales by farmers have resulted in a storage crunch, with large quantities of corn in temporary storage on the ground. Once again, natural resource industry output shows little change from earlier in the year. Oil, gas and coal output is reportedly stable, with little new leasing or drilling.