Midwest Farmland Values Inch Up in Q1 2026 — But Cracks Are Showing
The Chicago Federal Reserve just released their latest AgLetter
https://www.chicagofed.org/publications/agletter/2025-2029/may-2026 and the headline number looks decent on the surface: Seventh District farmland values were up 3% year-over-year in the first quarter of 2026. For landowners who have watched values soften over the past couple of years, that’s a welcome sign. But dig a little deeper and the picture is more complicated.
Quarter-over-quarter, “good” farmland actually slipped 1% from Q4 2025 to Q1 2026, which suggests the annual gain is really a comparison to a weaker period a year ago rather than fresh momentum. Cash rental rates across the district dropped 3% in 2026 which is the second consecutive annual decline after a strong run of increases from 2021 through 2024. That’s a meaningful data point for both landlords setting rents and farm operators building cash flow projections.
On the state-by-state breakdown, Indiana was the lone bright spot with cash rents up 2%, while Illinois fell 1%, Iowa dropped 4%, and Wisconsin was down 1%.
The credit side of the ledger is where things get more serious. Loan repayment rates have now declined for ten consecutive quarters, while loan renewals and extensions hit their highest level since Q2 2020. That’s a meaningful stress signal. On average, lenders reported that about 17% of their farm borrowers carried more debt into 2026 than they did in 2025. As one Iowa lender put it, cash flow projections for many operations are at or below breakeven and borrowers are drawing down working capital to cover shortfalls.
Despite all of this, the land market itself hasn’t cracked. More than 80% of surveyed lenders expect farmland values to hold steady in Q2 2026, though 56% of respondents believe farmland is currently overvalued. That’s a notable tension where a majority think land is priced too high, yet almost none expect prices to fall in the near term.
The bottom line: farmland is holding its value, but the farm economy underneath it is under real pressure. Operators burning through working capital and rolling over debt is not a sustainable trend. Keep an eye on commodity prices and input costs as we head into the heart of the 2026 growing season.