The Delinquency Wave

It is too hot to stand in a feedlot this week, so I am in the office. I used the time on something I have been explaining with my hands for years: where farm loans go late, and when. I had Mark Twain, who does our modeling, put every late farm loan since 2001 on a map. Press play.

Each dot is a bank, placed at its headquarters and sized by its farm loans. The color is the share of those loans that are 30 days or more late, or no longer accruing interest. Purple shading is drought. The prices underneath are six things farmers sell and two they buy. It runs one month at a time from 2001.

A farm year, in loans

A crop farmer borrows in the spring for seed, fertilizer, fuel and rent, and pays when the crop is sold. A cattleman borrows to buy calves and feed, and pays when they ship. The loan is an operating line. Mine usually run about nine months and get drawn as the season calls for it. The collateral is mostly what is in the field or on the hoof: the growing crop, the grain in the bin, the calves. Bankers in the Kansas City Fed’s survey are charging about 7.4% on one.

The line breathes with the year. Measured against its own trend, the operating book at the typical farm bank is about 4.5% low on March 31, after the crop has been sold and the line paid down, and fullest in the fall. That part is moving. Twenty years ago the high was September 30. In the last five years it has been December 31. Farmers are paying down later than they used to. Grain held in the bin and sold after New Year’s would do that. So would buying next year’s fertilizer in December.

Late loans run the other way. March 31 has been the worst date of the year in 19 to 25 of the last 25 years, depending on how far north you look. What is still unpaid at the end of March is what last year’s crop did not cover. Then the renewals get done and the number drops through the summer. It does not roll north with the planters. Everybody is late at the same time. The north just swings harder: up by the Canadian border, March runs about 47% above the year’s average and September about 28% below. In the far south it is 18% and 10%. My explanation is fewer paydays.

Right now the money for this year’s line is still standing in the field. By USDA’s count for the week ending Sept. 27, the corn was 18% harvested and the soybeans 17%, both right at the five-year pace. Winter wheat was 27% planted, behind the usual 34%. USDA expects 178.5 bushels of corn an acre and 15.8 billion bushels in all, at a season price of $4.80. It has soybeans at $12.00 and wheat at $6.40.

Corn country and cattle country

I sort farm banks by where they sit. Corn country is Iowa, Illinois, Indiana, Minnesota, Ohio and Missouri: 411 farm banks with $39.1 billion of farm loans, 59% of it on land and the rest operating. Cattle country is Texas, Oklahoma, Kansas, Nebraska, Colorado, South Dakota, Montana and Wyoming: 359 farm banks with $31.4 billion, split down the middle. Nebraska is both, and will tell you so.

Late farm loans, four quarters	Corn country	Cattle country
Peak, September 2020	1.93%	2.41%
Low, end of 2023	0.60%	0.90%
June 2026	1.05%	1.09%

Corn country’s late loans are up by three-quarters from the low. Cattle country’s are up by a fifth. Press Four-quarter average and you can watch it: the last rise came down from the Upper Midwest in late 2015 and reached Texas fifteen months later. This one came in from the edges, the Upper Midwest and the Southeast first, and the plains are still pale.

My reading is cattle. The herd was 86.2 million head on January 1, the fewest since 1951, and the cattle price on the chart under the map is more than double its long-run average. Everybody knows it at the meat counter: ground beef averaged $6.92 a pound in August and steak $12.81, up from $6.32 and $12.22 a year before. Nate Kauffman, who heads the Kansas City Fed’s Center for Agriculture and the Economy, showed the ranch side of it in August: a cow costs about $1,300 a year to keep, and her calf brings about $2,900. USDA has cattle and calf receipts up 5.2% this year, to $140.7 billion. That is my reading, not the map’s. The map does not know what anybody raises.

Cattle are live collateral. They eat every day, and right now they are worth a great deal, which is also why they get stolen. The Texas and Southwestern Cattle Raisers Association keeps 30 special rangers for that, commissioned peace officers in Texas and Oklahoma, and they recover about $5 million of stolen cattle and gear a year. Twelve head wearing a coat-hanger brand were last seen near Chelsea, Oklahoma, on Feb. 12, and a special ranger has the case. I think of them as the collateral police.

The crop side is selling more and keeping less. USDA has corn receipts up 11%. It also has the fertilizer bill up 15.3%, the fuel bill up 28.8%, and net income for the whole farm sector down 2.6%, to $158.4 billion. Cheap corn is good news for whoever feeds it and bad news for whoever grew it. A man on a farm podcast said a chicken is just grain, congealed and running around. So is a steer, with more steps.

Then there is diesel. Last month I was in Fresno, California, for an ag lenders’ conference. While fictitious, it was organized by local ag lenders, Rabobank among them, and supported by the other large ag lenders in the area: Wells Fargo, BMO, U.S. Bank, Bank of America, Citibank and JPMorgan Chase. Rabobank’s bankers showed up. Nobody else came. But their support was appreciated. I stopped for fuel on the way in. The man at the pump also owned the station. “We charge $10.41 a gallon for diesel,” he said. “It won’t fit on the d@mn sign. We’re gonna have to move to liters or whatever.” The real pumps are not far behind. On Sept. 10, GasBuddy counted six California stations with diesel at $9.999, which is as high as a pump will read. The state average was $8.40 on Sept. 29. The national average set a record of $6.53 on Sept. 21. In January it was $3.46. A squeeze like that does not show up as a late loan until the line comes due.

What fills the gap is government checks: $47.4 billion this year, against $28 billion last year. I keep a calendar of when they land. USDA’s bridge payments, $44.36 an acre for corn and $30.88 for soybeans, were in accounts by the end of February, just ahead of the worst date of the year. The price-loss payments on the 2025 crop start this month. Robin Reid and Jenny Ifft at Kansas State put them at 27 cents a bushel for corn and $1.29 for wheat. A lender who does not know those dates is guessing at March.

The weather

The purple on the map is drought: the share of each state that the U.S. Drought Monitor has in severe drought or worse. People credit Mark with the line that everybody talks about the weather and nobody does anything about it. It was his friend Charles Dudley Warner, an editor at the Hartford Courant. Mark runs Quote Compliance here and will not let himself keep it. For the record, a farm lender does do something about the weather. She checks that the crop insurance is in the file.

What the map cannot see

The map shows loans that are late. Ask lenders directly and the number is bigger. In the Kansas City Fed’s survey of farm lenders in its district, about 23% of farm loan dollars have some repayment problem this year, most of it minor. In 2022 and 2023 it was about 13%.

The difference is what a lender does before a loan goes late. When a bad year leaves an operating line bigger than one harvest can pay back, I term it out: turn it into a loan paid over years, usually against the land. The late-loan number goes down when I do that. The debt does not. Farm banks hold about 35% more operating loans than they did three years ago and about 16% more land loans, and USDA puts farm debt at $605.1 billion, up 4.6%. Dryland cropland is worth about 2.5% more than a year ago in the Federal Reserve’s surveys, and land that holds its value is what makes a term-out possible. Low late loans and fast loan growth are one fact reported twice.

Mark has sat on the other side of that desk. His publishing firm failed in April 1894. The New York Times ran it as “Mark Twain’s Company in Trouble.” The next summer he offered his creditors about half, and the rest out of a lecture tour around the world:

"It is my intention to ask them to accept that as a legal discharge, and trust to my honor to pay the other 50 per cent. as fast as I can earn it."

— Mark Twain, statement on his debts, Vancouver, B.C. The New York Times, Aug. 17, 1895

He gave himself four years and was done by 1898. That is a term-out. I would have asked for the lecture schedule and a lien on ticket sales.

Who lends

A farm bank, as the regulators count them, has a quarter or more of its loans on farms. There are 900-odd, and they hold $92 billion of farm loans. Other banks under $50 billion hold $99 billion. The map opens on all of them, which is why there are dots on the coasts. Banks of $50 billion and up hold another $22 billion and are not on the map. Their headquarters are in cities. The farms are not.

Ty Kreitman at the Kansas City Fed went through the farm banks’ second-quarter reports last month. Operating debt is growing strongly at them and slipping at the other banks. Their return on assets is the highest in records back to 1984. About half of them have little or nothing late, and a quarter are above 1.4%.

That is why the page carries two numbers. The big one counts dollars: late farm loans over all farm loans. Next to it is the median bank. In June 2017, farm banks had 1.54% of their farm loans past due, and the median farm bank had 0.27%. Both are right. The Mean has more money. The Median has more banks.

Mark’s notebook has a line for that, from 1898:

"When we remember we are all mad, the mysteries disappear and life stands explained."

— Mark Twain, Notebook, 1898

Bank figures are from Call Reports, with each bank placed at its main office in the FDIC’s yearly survey of branches. Drought is from the U.S. Drought Monitor, produced by the National Drought Mitigation Center, USDA and NOAA. The price charts are Bureau of Labor Statistics producer price indexes. Harvest and planting progress are from USDA Crop Progress for the week ending Sept. 27, 2026. Crop size and prices are from USDA’s Sept. 11 supply and demand estimates. Farm income, receipts, expenses, payments and debt are from USDA’s Sept. 3 farm income forecast. The cattle count is USDA’s for Jan. 1, 2026. Beef prices are Bureau of Labor Statistics city averages. Diesel averages are from the Energy Information Administration. Lender surveys, loan rates, cropland values and farm bank figures are from the Federal Reserve Bank of Kansas City’s Center for Agriculture and the Economy.