Despite continued weakness in the crop sector, farm financial conditions have tightened only gradually, and stress remains limited, said Kansas City Federal Reserve Bank Economist Ty Kreitman, in a Bank bulletin.
Loan delinquency rates remain low, average farmland values stable, and leverage is modest, Kreitman said. Direct government payments limited losses for crop operations and provided modest relief, while strong cattle prices boosted incomes in many areas.
PROFIT OPPORTUNITIES NARROW
Over the past three years, profit opportunities for key US crops were narrow alongside elevated production costs and low prices, and recent volatility in energy and fertilizer markets increased uncertainty for many producers.
Nevertheless, farm-level estimates of solvency and liquidity suggested that most farms remained in a sound financial position, he said. The share of farms with low, moderate or high leverage — measured by their debt-to-asset ratios — remained similar to historical averages.
Average liquidity for those farms similarly remained in line with historical averages, the Bank bulletin said. The average current ratio — measured as current assets divided by current liabilities — remained exceptionally strong in 2025 for low-leverage farms.
Although liquidity for moderate and high-leverage farms declined in recent years, it remained above the average from 2015 to 2019, when crop profits were similarly compressed, Kreitman said. This more modest decline in liquidity may partly reflect the strength of conditions for beef cattle producers and for crop and dairy farms diversified with beef cattle, as cattle prices during this period were strong.
GOVERNMENT PAYMENTS HELPED
Although the most highly leveraged crop farms remained exposed to financial stress, their income and liquidity were supported by government payments and steady non-farm income, he said. When excluding income from non-farm sources and government payments, the average high-leverage crop farm had a loss of about $33,000 in 2025.
However, when including all income sources, average 2025 net income was more than $100,000, a considerable increase from 2024, the Bank bulletin said.
In addition to government payments and non-farm income, strong farm real estate values provided support to many farms, Kreitman said. A vast majority of operators own at least a portion of the land they farm.
In the 2022 USDA Agricultural Census, about 72% of US farmers were full owners, 22% were part-owners, and 6% rented all operated land, he said. Indeed, the asset composition of high- and low-leverage crop farms was comparable, with land comprising an average of about 30% of all assets and machinery valuations comprising another 20%. Current assets like prepaid expenses, crops and receivables are key determinants of liquidity, while long-term assets like land and machinery are key determinants of solvency.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $254.99 per cwt to $258.00, compared with last week’s range of $255.83 to $260.00 per cwt. FOB dressed steers and heifers went for $403.39 per cwt to $407.21, compared with $405.60 to $410.81.
The USDA choice cutout Wednesday was down $4.57 per cwt at $381.20 while select was down $2.80 at $363.09. The choice/select spread narrowed to $18.11, from $19.88 with 97 loads of fabricated product and 22 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $464.11 per cwt, and 50% beef was $180.37.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.23 to $1.43 a bushel over the Jul corn contract, which settled at $4.34 3/4 a bushel, down $0.07 3/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $370.75 per cwt, down $2.44. This compares with Wednesday’s Aug contract settlement of $362.05, up $1.40.