(Adds details, St. Louis Fed banker survey)
By Christine Stebbins
May 15 (Reuters) - Farmland values in the U.S. Plains states rose 20 percent in the first quarter from a year earlier, with acreage commanding record prices because of red-hot demand for cropland in the world's biggest food exporting nation, the Federal Reserve Bank of Kansas City said on Wednesday.
The rise marked the third straight year of double-digit annual increases, setting a survey record, the bank said, but the rate of gains moderated from the fourth quarter, with slower growth in farm income.
Irrigated farmland attracted the most interest. Values rose 21.5 percent, boosted by lingering concerns after the worst drought to hit the United States since the 1930s, the Kansas City Fed said in its quarterly survey of 223 district bankers.
Ranchland values jumped 14 percent.
The quarterly survey is a closely watched gauge of the U.S. farm economy. Skyrocketing land values, the basic collateral for most farmer loans, have stirred fears of the possibility of a ruinous bubble like the one in the 1980s, when overleveraged farmers lost their land as interest rates jumped.
But farmers, especially of grain producers, are in a much stronger financial position now than 30 years ago after several years of record exports of and prices for their crops.
The Kansas City Fed district stretches across the major wheat, corn and cattle states of Colorado, Kansas, Nebraska, Oklahoma and Wyoming, along with parts of New Mexico and Missouri.
Compared with the fourth quarter, the frantic pace of farmland price gains moderated, the bank said.
'After rising 7.7 percent and 9.0 percent in the first quarter of 2012, the value of nonirrigated and irrigated cropland rose 3.4 percent and 2.9 percent, respectively, in the first quarter of 2013,' the bank said. 'Cropland value gains slowed compared with last year due to falling crop prices and rising input costs.'
The western half of Missouri posted the biggest jump in land values, with nonirrigated farmland prices up 28 percent from a year earlier, the Kansas City Fed said.
Also on Wednesday, the Federal Bank of St. Louis issued its first-quarter survey for farmland in the southern Midwest and Midsouth.
Bankers said farmland values fell 2 percent from the fourth quarter, but the survey provided no year-earlier comparisons because this was only the bank's fourth quarterly survey.
The St. Louis Fed district includes eastern Missouri, Arkansas, southern parts of Illinois and Indiana, western sections of Kentucky and Tennessee, and parts of northern Mississippi.
The survey showed bankers thought land values and cash rents would continue to rise, although they have tempered their expectations, the St. Louis Fed report said.
'Fewer responses indicate that agricultural land values will continue to climb over the next quarter,' the bank said.
The Chicago Federal Reserve, which surveys bankers across the heart of the Midwest Corn Belt, plans to release its banker survey later Wednesday.
Bankers in the Kansas City Fed district said record land prices raised debt obligations for young and beginning farmers and producers expanding their operations. Bankers also indicated that livestock producers were more highly leveraged due to recent losses accentuated by the 2012 drought.
'Producers appeared to be taking advantage of record low interest rates to finance capital purchases but were using cash to cover operating costs, limiting overall operating loan demand,' the bank said.
Loan repayment rates remained higher than in 2012, but bankers expected the pace of improvement to slow due to rising production costs and forecasts for lower farm income.
'Some bankers expressed concern that a downturn in farm income or land values could impact the ability of more leveraged operations to meet debt obligations, particularly for borrowers using land as collateral on other loans,' the bank said.
(Reporting by Christine Stebbins; Editing by Lisa Von Ahn) Keywords: USA FARMLAND/PLAINS
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