Commodity prices bog down December Rural Mainstreet Index | News

(Omaha) — A leading economic indicator for the Midwest had a not so “merry and bright” reading for the final month of the year.

December’s Rural Mainstreet Index dropped back below growth neutral for the 11th time in 2024, falling to 39.6 from November’s reading of 50.2. A reading of 50.0 represents growth neutral for the survey of bank CEOs in a 10-state region–including Iowa, Nebraska, and Missouri. Speaking on KMA’s “Morning Line” program Monday morning, Creighton University Economics Professor Dr. Ernie Goss says lagging commodity prices continue to bog down the agricultural sector of the Midwest economy.

“In terms of grain, we’re talking about chiefly soybeans, corn, and wheat, and they’re all not in a range that really puts a lot of profit in the hands of the farmers,” said Goss. “Of course, input costs are not down relative to those prices so all in all, farm income is down and that’s really holding down our survey.”

Meanwhile, for the seventh time in the past eight months, farmland prices sank. The region’s farmland index fell to 41.3 from November’s 44.4. The survey’s farm equipment sales index also slumped to 14.3–its lowest level since October 2016.

“We ask bankers to project out farmland prices and they’re expecting a drop of anywhere from 2-to-3% over the next 12 months,” he said. “In terms of farm equipment sales, we’re down for the 17th straight month.”

But, Goss says the spending bill passed by Congress late last week did provide some positive news, including a one-year extension of the 2018 farm bill and nearly $110 billion in disaster and farmer aid. While it provides roughly $21 billion in disaster aid for farmers, he notes a five-year farm bill would help provide more certainty for producers.

“That provides some disaster relief for farmers and that’s probably around $30-to-$40 an acre, which is better than nothing of course, and we’ve got a one-year farm bill passed,” he said. “We’d like to see a five-year program passed, but that didn’t work this time. It’s been one year at a time and that’s not good for farmers–they face enough volatility with the weather and now they’ve got a Congress that won’t go out five years on a program.”

He notes that the $10 billion in economic aid for farmers will also go a long way in offsetting the loss in farmer income this past year. One positive from the December survey, Goss says, was the home sales and retail sales indexes, the latter of which surged above growth neutral to 52.1–up from November’s reading of 42.

“The retail readings for the nation were up and were pretty darn good for the month of November and we’re seeing our numbers for the month of December looking pretty there and rose above growth neutral–it’s not as strong as we would like to see but it’s up significant from November’s reading,” said Goss. “So, that’s some good news, but we need to see a long string of those to say the retail side of the rural mainstreet economy is doing well.”

However, Goss says the majority of bankers remain pessimistic about economic growth over the next six months, with one in five bankers expecting a recession in 2025. You can hear the full interview with Dr. Ernie Goss below: