CHICAGO (Dow Jones) -- Farmland values dropped 4 percent in the heart of the Midwest in the third quarter compared to a year ago, the Federal Reserve Bank of Chicago said Thursday.

Agricultural credit conditions were also weaker than a year ago, and agricultural bankers are expecting weaker farmland prices during the fourth quarter as well.

The report covers the Seventh Federal Reserve District, which includes all of Iowa and most of Illinois, Wisconsin, Indiana and Michigan.

It was the third straight quarter that farmland values dropped from the prior year. However, values in the third quarter were up 2 ...