Farm loan growth continued to be concentrated among agricultural banks during the first quarter of 2026 and production loans declined notably at some of the largest lenders, according to a report from the Kansas City Federal Reserve Bank by Economist Ty Kreitman.
FARM DEBT GROWING
According to commercial bank Reports of Condition and Income, farm real estate and non-real estate debt at agricultural banks continued to grow at a steady pace. However, non-real estate loans at non-agricultural banks declined even as real estate loans at these lenders increased.
The pullback in production loans was concentrated among a small number of banks with farm loan portfolios larger than $1 billion, the Federal Reserve Bank report said. Farm loan delinquency rates were nearly unchanged from a year ago and remained relatively low, though loan performance has been weaker at large lenders in recent years.
Aggregate farm financial conditions remained resilient with support from government payments, strong cattle revenues and stable farm real estate values, Kreitman said. However, the decline in production loans at a few large banks likely reflected caution toward ongoing crop sector challenges by some creditors and a growing concentration of lenders with specialization in agriculture.
Q1 FARM DEBT PATTERNS SPLIT
Patterns in farm debt at commercial banks remained split across agricultural and non-agricultural banks, the Federal Reserve Bank said. Growth in outstanding non-real estate loans at agricultural banks remained strong in the first quarter while balances at non-agricultural banks declined for the first time since 2021.
After declining slightly in 2025, farm real estate debt at non-agricultural banks grew in the first months of the year, and growth in real estate loans at agricultural banks was similar to recent quarters, the Bank said.
The change in farm debt at non-agricultural banks was driven primarily by activity at the largest lenders, Kreitman said. Non-real estate loan balances at banks with farm loan portfolios larger than $1 billion declined by nearly 10% from a year ago but real estate loan balances at those lenders increased nearly 10%.
Both types of loans increased across all other size cohorts and growth was most pronounced at mid-to-large sized lenders with portfolios between $100 million and $1 billion.
The reduction in farm debt at large banks was concentrated among a small number of institutions, the Federal Reserve Bank said. Only three banks with the largest portfolios had more than a 10% decline in farm debt compared with last year.
Across all size cohorts, more banks had an increase in farm debt than a decline and a notable portion had loan growth exceeding 10%, the Bank report said.
LARGE BANK PRODUCTION DEBT DECLINES
Farm production debt among large banks declined as delinquency rates among those lenders remained somewhat higher, the report said. Similar to the same time last year, about 2% of farm loans at the largest agricultural banks were past due at least 30 days and that share was less than 1.5% for all other size cohorts.
While delinquency rates remained relatively low overall, large lenders maintained a problem loan rate higher than banks of other sizes for the past two decades and some may have limited growth in agricultural lending in response to ongoing challenges with loan performance, the report said.
Uncollected farm debt also remained higher among the largest agricultural lenders, Kreitman said. The charge-off rate on agricultural loans for the largest banks declined slightly in the first quarter of 2026 after increasing to an average of about 0.25% in mid-2025.
Charge-offs for all other size cohorts increased slightly in the first quarter but remained negligible and likely reflected the write-off of a small portion of loans that have been unpaid for an extended period, the Bank said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $258.59 per cwt to $260.00, compared with last week’s range of $256.28 to $264.00 per cwt. FOB dressed steers and heifers went for $406.76 per cwt to $410.81, compared with $401.64 to $410.90.
The USDA choice cutout Wednesday was down $1.90 per cwt at $391.26 while select was down $1.99 at $369.69. The choice/select spread widened to $21.57, from $21.48 with 94 loads of fabricated product and 19 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $463.38 per cwt, and 50% beef was $180.66.
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 $4.21 a bushel, up $0.08 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $376.99 per cwt, down $0.41. This compares with Wednesday’s Aug contract settlement of $364.15, down $0.45.