Agricultural Survey

Quarterly comments

District bankers were asked for additional comments concerning agricultural land values and credit conditions. Some comments have been edited for grammar and clarity.

• Cotton production exceeded expectations. The price is below production costs, so cotton acreage in 2026 will be down significantly. Recent rains have the wheat crop off to a great start. Cattle prices have dropped about $60 per cost per hundredweight (CWT) mostly due to reduced tariffs on beef. Cattle numbers and inventory in feedlots are alarmingly low, yet the market is declining.
• I expect to see farmland values drop somewhat with commodity prices being so low. Many producers are looking to livestock or hunting to help with crop production revenue shortfalls. It is a challenging time in farming.

• Recent good rains have lifted spirits. Cattle prices are still high. The wheat crop is behind [schedule] due to dry weather.              

• November was exceptionally dry. Weather had no impact on the cotton harvest, production was very good with a majority of the crop, three-bales-plus on dryland and irrigated. Calves are being held over to 2026 for tax reasons. Hay production was good with plenty of inventory on hand.

• Commodity prices continue to slump making profitability more difficult, especially in high input crops like rice and cotton.

• Agricultural land around Harris and surrounding counties is being bought up for development. Agriculture in Southeast Texas as we know it will not be around much longer. Between the depressed rice prices and urbanization, it’ll be a challenge for the industry to survive.
• Commodity prices coupled with inflated input costs have decreased overall farm incomes and slowed repayment speeds. Annual farm loan renewal packages have been slow to come in as margin shrinkage and uncertainty on future planting intentions have caused farm production borrowers to hesitate until there is a clearer picture. Some farm relief from government payments is on the horizon but may be too little too late for several operators who may need to liquidate some assets to bring more operating capital into the farm to generate cash flow for 2026 plans. Ranching economic dynamics remain strong with cheaper feed costs and stronger pricing. Even so, operating lines for stocker and feeder cattle have significantly increased although margins remain around the same dollar per head, posing more risk. Overall prices for farm and ranch land have still been on the increase, but demand has started to slow with increased interest rates. Most transactions in our markets involved 1031 exchange funds. Traditional purchases are very limited.

• Barns continue to hold carry-over alfalfa hay inventory, driven primarily by the reduced number of dairy cattle on feed in the area. Farming season is basically complete except for the pecan harvest, which is already underway. Cattle are on winter wheat, and the ranchers have enjoyed another robust year of cattle prices.

• With the Farm Service Agency tightening its loan standards, it will be somewhat more difficult to get guaranteed loans approved. Some farmers will likely not make it.
• Recent artificial intelligence construction projects are putting pressure on landowners to sell to developers and have taken sizable acreage out of production, etc. This will only continue to get worse as the project gets more intense.

Historical data

Historical data can be downloaded dating back to first quarter 2000.

• Land Values
• Cash Rents
• Farm Lending Indexes
• Loan Volume Indexes by Loan Type
• Anticipated Farmland Values and Credit Standards
• Interest Rates by Loan Type

Charts

What changes occurred in non-real-estate farm loans at your bank in the past three months compared with a year earlier?

What changes occurred in the volume of farm loans made by your bank in the past three months compared with a year earlier?

What trend in farmland values do you expect in your area in the next three months?

What change occurred in credit standards for agricultural loans at your bank in the past three months compared with a year earlier?

Tables