Already-bulging U.S. corn and soybean stockpiles are much larger than expected, said a USDA report, compounding the effects of a trade war and bumper crops on the farm economy. Farm income this year is forecast to be the lowest since 2006.
Corn may be more profitable than soybeans in 2019, but that isn’t saying much about the outlook for midwestern farmers, say a pair of agricultural economists from the University of Illinois.
When it decides whether to make a second round of Trump tariff payments, the USDA said on Thursday, it will consider changes in tariffs, commodity prices, and other market conditions since it announced that $4.7 billion would be split among the producers of seven commodities this fall.
The mammoth corn and soybean crops awaiting harvest across America are larger than expected, the USDA said on Wednesday in its monthly Crop Production report.
U.S. farm income is higher than expected this year and is regaining its footing after taking a tumble early this decade, said the Agriculture Department on Thursday. Nonetheless, net farm income will be the lowest since 2006, and the debt-to-asset ratio is rising for the sixth year in a row.
Nearly half of the $4.7 billion in Trump tariff payments will go to five midwestern states that are the largest soybean and hog producers in the country, said a farm group analysis on Tuesday. At the same time, an environmental group challenged the USDA to explain its opaque development of the bailout package.
President Trump's promise to protect U.S. agriculture from retaliatory tariffs by China and other countries will be paid on the installment plan — half this fall and the rest in December, or early 2018 if assistance is still needed, said Agriculture Secretary Sonny Perdue on Monday. The USDA announced $6.2 billion in outlays that will begin in September, with soybean growers in line for $3.6 billion of it.
Soybeans are the largest U.S. farm export to China, and growers of the oilseed may be in line for huge federal payments, worth an average of $85 an acre, to offset the impact of retaliatory Chinese tariffs. Corn growers, meanwhile, might not get enough per acre to buy a cup of coffee at many restaurants.
The slump in commodity prices that has accompanied the ongoing tit-for-tat trade war has sapped the farm economy this summer and poses financial risks going into the fall, said Federal Reserve banks in Chicago and Kansas City on Thursday.