Weakness in the crop sector weighed further on farm finances, and credit conditions tightened gradually in the third quarter of 2025.
According to Federal Reserve District Surveys of Agricultural Credit Conditions, farm income and loan repayment rates in the Midwest and Plains states declined at a pace similar to recent months, said Kansas City Federal Reserve Bank Economist Ty Kreitman, in a Bank release.
The depletion of working capital and tighter farm finances also drove steady increases in non-real estate loan demand and subdued capital spending by farm operations, Kreitman said. Despite pressure from weaker farm finances, non-irrigated cropland values in most regions remained steady or increased slightly.
CATTLE-SECTOR STRENGTH
Strength in the cattle sector was expected to boost US farm income in 2025, but profit opportunities for crop producers remained narrow, even with recent increases in prices, and continued to weigh on the outlook for the agricultural economy, the Bank release said. Conditions have been particularly challenging for the most highly leveraged crop operations, but overall financial stress in the sector has remained limited with ongoing support from steady farmland values and a modest boost from aid associated with the American Relief Act earlier in the year.
Agricultural credit conditions deteriorated gradually in the third quarter, Kreitman said. Farm borrower income and loan repayment rates across all participating Federal Reserve districts, on average, declined at a pace similar to recent months while renewal and extension activity also increased at a comparable rate.
Farm finances have tightened alongside limited profit opportunities in the crop sector, but strength in the cattle sector has supported conditions in some areas.
FINANCING DEMAND UP
Demand for financing also rose gradually, and fund availability was steady, the economist said. Non-real estate loan demand increased at a pace similar to the past year on average across all regions, but was strongest in the Chicago, Kansas City and Minneapolis regions.
Fund availability was nearly unchanged on average but declined modestly in the Chicago, Minneapolis and St. Louis districts, he said.
Capital spending by farms was still subdued alongside tight finances while household spending showed signs of stabilizing, Kreitman said. On average across all contributing districts, capital spending declined at the fastest pace since early 2020.
Household spending was nearly unchanged for the second straight quarter following years of steady growth, he said.
Despite pressure from weaker farm financial conditions, agricultural real estate values remained firm, Kreitman said. The value of non-irrigated cropland changed by less 5% over the past year in most portions of the Midwest and Plains.
As of the third quarter, cropland values increased from a year ago in more than half of all states covered by the surveys with strong growth in Oklahoma and Texas, he said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $225.25 per cwt to $225.80, compared with last week’s range of $218.52 to $225.00 per cwt. FOB dressed steers and heifers went for $344.40 per cwt to $345.57, compared with $331.92 to $349.49.
The USDA choice cutout Monday was down $0.30 per cwt at $360.90 while select was up $1.21 at $348.60. The choice/select spread narrowed to $12.30 from $13.81 with 91 loads of fabricated product and 21 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $395.56 per cwt, and 50% beef was $163.47.
The USDA said basis bids for corn from feeders in the Southern Plains were steady to down $0.05 at $0.90 to $1.10 a bushel over the Mar corn contract, which settled at $4.43 3/4, down $0.01.
Fifteen steer contracts were tendered for delivery Monday.
The CME Feeder Cattle Index for the seven days ended Friday was $343.06 per cwt, down $0.67. This compares with Monday’s Jan contract settlement of $335.65, down $3.40.