Despite gradual deterioration in farm financial conditions over the past year, agricultural real estate values in the 10th Federal Reserve district remained strong, according to a survey by the Kansas City Federal Reserve Bank.
According to survey respondents, farm income declined at a pace similar to the previous year and liquidity was tight for a large share of borrowers, a Bank release said. Despite softer farm finances, the value of cropland in the region was nearly unchanged, and ranchland values increased modestly.
Land markets were stable alongside steady sales volume and firm demand, and strong valuations continued to provide support for the sector, the Bank said.
FARM ECONOMY OUTLOOK SUBDUED
The outlook for the US farm economy remained subdued alongside weakness in the crop sector, but aggregate farm financial stress remained limited, the Bank said. Demand for farm loans grew alongside tighter working capital, elevated production costs and a surge in cattle prices.
Direct government payments and resilient farm real estate values eased some of the strain from weak profitability for crop producers and strength in the cattle sector has lifted incomes in many areas, the Bank said.
Farm loan delinquency rates remained low despite increasing slightly in recent months but persistent weakness in the crop sector could weigh further on agricultural credit conditions, the Bank said.
FARM INCOME AND CREDIT CONDITIONS
Farm income and liquidity deteriorated gradually through the end of 2025, the Bank said. The pace of decline in farm borrower income and liquidity in the 10th district was similar to the past year.
The share of lenders reporting lower farm income than a year earlier dropped slightly compared with last year’s survey in all states except Oklahoma and the Mountain states, the Bank said.
A sizeable portion of farm borrowers had liquidity positions that signaled modest financial challenges, the Bank said. On average, lenders in the region reported that about 45% of farm borrowers had current ratios (current assets divided by current liabilities) below 1.5. Liquidity has tightened alongside compressed margins among row crop producers, but current ratios also remained strong for a portion of borrowers.
Tighter farm finances continued to weigh on credit conditions, but the pace of deterioration decelerated in the fourth quarter, the Bank said. The pace of decline in farm loan repayment rates slowed following several quarters of gradually faster deterioration.
The share of lenders reporting that loan repayment was lower than the same time a year ago dropped considerably in all states except Oklahoma and the Mountain States.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $247.79 per cwt to $250.65, compared with last week’s range of $242.46 to $255.40 per cwt. FOB dressed steers and heifers went for $387.65 per cwt to $391.91, compared with $381.78 to $394.78.
The USDA choice cutout Wednesday was up $1.80 per cwt at $379.23 while select was up $1.06 at $367.07. The choice/select spread widened to $12.16 from $11.42 with 68 loads of fabricated product and 31 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $428.41 per cwt, and 50% beef was $149.07.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $0.98 to $1.12 a bushel over the Mar corn contract, which settled at $4.30 1/2, up $0.02 3/4.
No live cattle delivery intentions were posted Wednesday.
The CME Feeder Cattle Index for the seven days ended Tuesday was $374.79 per cwt, down $0.62. This compares with Wednesday’s Mar contract settlement of $366.30, up $1.20.