WASHINGTON (Reuters) - A U.S. banking regulator on Thursday said more farmers were falling behind on loans held by community banks compared to a year earlier and that it was watching risks in the agriculture sector.
In a quarterly report on the health of U.S. banks, the Federal Deposit Insurance Corporation did not directly refer to the Trump administration's trade war with China which began in 2018. But the regulator noted some farm banks were reporting a deterioration in asset quality.
"We continue to monitor risks in the agriculture sector connected to low commodity prices and farm incomes," the FDIC said in a prepared statement to be read by officials at a media briefing.
The FDIC said the share of long past-due farm loans held by community banks, which are major agricultural lenders, was 1.28% in the April-June period, up 13 basis points from the same period in 2018. The ratio captures the share of farm loans that are at least 90 days past due or which no longer accrue interest because of repayment doubts.
Commodity prices have been hurt over the past year by a U.S.-China trade spat that has sparked higher Chinese tariffs on U.S. agricultural exports.
China is a top buyer of U.S. soybeans, the nation's most valuable agricultural export, and it has dramatically reduced its purchases.