Lower commodity prices darken farm income outlook, says Federal Reserve
Farmers are on track to harvest some of their largest corn and soybean crops ever, but the ongoing decline in commodity prices is putting farm income in question, said the Beige Book issued by the Federal Reserve Board on Wednesday. Regional Fed banks in Chicago and Minneapolis said the farm income outlook had weakened in recent weeks, while the Kansas City Fed said agricultural conditions in its district “faced headwinds from weak crop prices.”
Value of U.S. corn, soy, and wheat crops slips
The farm-gate value of this year's U.S. corn, soybean, and wheat crops would be nearly 8 percent lower than the 2023 crops due to the continuing decline in commodity prices, according to USDA estimates of season-average prices.
Lower crop returns will pressure farmland market, say analysts
The boom in corn and soybean prices since 2020 is fading away, with lower farm income likely in the near term, wrote three agricultural economists in the farmdoc daily blog. “Returns to farming have declined, suggesting that cash rents should decline as well. How quickly or how much cash rents decline will depend on how far commodity prices fall as well as potential policy responses to those declines,” they said.
U.S. farmers head for back-to-back 15 billion-bushel corn crops
Growers are planting more corn than expected this year and the result could be the second harvest in a row to exceed 15 billion bushels, according to a USDA survey of growers and projected yields per acre. The mammoth crop, only slightly smaller than the record set last year, could drive down farmgate prices for corn.
Second year of lower returns on corn and soybeans
The continued decline in season-average corn and soybean prices since the peaks of 2022 will pinch farmer returns from the crops for the second year in a row, said three analysts writing at the farmdoc daily blog. They estimated that operator and land returns would fall below $300 an acre, levels last seen from 2014 to 2019.
Higher commodity prices soften farm income decline, say banks
Springtime increases in corn, soybean, and wheat prices brightened the outlook for the agricultural sector amid expectations of lower farm income this year than in 2023, said Federal Reserve regional banks in the Beige Book report on Wednesday. The Chicago and Dallas banks said the discovery of bird flu in dairy cattle was a cause for concern.
Big crops and lower prices for U.S. farmers in 2024
American farmers will harvest monster corn and soybean crops this year, including the largest soybean crop ever, at 4.5 billion bushels, and the third corn crop in four years to top 15 billion bushels, projected the Agriculture Department on Thursday. Season-average prices for the crops would fall for the second year in a row from the spike in commodity markets created by Russia’s invasion of Ukraine in 2022.
While still above average, farm income is forecast to fall this year
U.S. farm income will tumble for the second year in a row from the record set in 2022, pulled down by lower commodity prices and rising production costs, forecast the Agriculture Department on Wednesday. Net farm income would fall 25 percent, to $116.1 billion, but still run 15 percent ahead of its 10-year average.
As input prices fall, farmers’ concerns shift to commodity prices
For the past year, the top concern, by far, of U.S. farmers polled by Purdue University has been higher input costs. Now, it's a tie between lower commodity prices and higher input costs at 28 percent each, said the monthly Ag Economy Barometer on Tuesday.
Interest rates rise faster than farmland values, says economist
For the first time since 2001, interest rates are rising faster than farmland values, creating a potential obstacle to land purchasers, said assistant economist Ty Kreitman of the Kansas City Federal Reserve Bank. “With interest costs now above average land value appreciation, farm operating profits will determine the magnitude of returns for financed land,” he said.
As inflation falls, ‘backwards pressure’ on food prices, analyst says
Compared to food price inflation of 11 percent in 2022, grocery price increases will be virtually nonexistent this year, said a Wells Fargo analyst Wednesday during a panel discussion on the 2024 outlook for the food and ag sector. A Rabobank analyst said that softer commodity prices would take the steam out of the hot farmland market.
Lower commodity prices point to belt-tightening for corn and soy growers
Corn and soybean growers will operate in "a much tighter margin environment" this year than in recent years because of lower market prices for the crops, said two University of Illinois agricultural economists on Tuesday. They cited fertilizer and land rents as potential areas for cost cutting.
Farm income this year will be second-highest ever, says USDA
U.S. net farm income will be a stronger-than-expected $151 billion this year, the second-highest total on record, estimated the Agriculture Department on Thursday. That’s roughly $10 billion higher than the August forecast and due chiefly to cost cutting by producers, aided by lower fertilizer, fuel, and feed prices.
Vilsack encourages congressional creativity to break farm bill impasse
Agriculture Secretary Tom Vilsack said he’s certain Congress will meet the Dec. 31 deadline to pass the farm bill or temporarily revive its predecessor, but it will require a dose of creativity to do it. Lawmakers have been deadlocked for weeks over farm group demands for a larger safety net when there are few ways to pay for it.
Farm bill’s default reference price hikes could add billions to subsidy costs
Almost every farm in the country will benefit from a more generous trigger for crop subsidy payments in the years ahead if Congress does nothing more than extend the current farm law, said associate professor Jonathan Coppess of the University of Illinois on Thursday.
Commodity price boom is fading away, says FAPRI
The season-average prices for most U.S. agricultural commodities are on a decline that could persist into 2026, said a report from the FAPRI think tank at the University of Missouri. Global economic growth has slowed after a heady recovery from the pandemic in 2021, and world grain production is up this year, creating more competition for U.S. crops.
Dairy subsidies could cost $19 billion without new farm bill
The cost of price supports for dairy, and for an array of field crops, could skyrocket if Congress allows the 2018 farm law to expire without a replacement, estimated the Congressional Research Service.
Big corn and soybean crops in 2023, but lower farm-gate value
The farm-gate value of U.S. corn and soybeans, the two most widely grown crops in the country, will fall 16 percent compared to last year's harvests due to a steep drop in commodity prices, according to USDA data. The season-average price for corn was forecast to be $1.70 a bushel below the near-record prices paid for the 2022 crop, and soybeans were expected to be $1.50 a bushel below last year's price.
Food price index edges upward on fears of disrupted supplies
The FAO index of global commodity prices rose 1.3 percent during July, its second increase since April, reflecting the termination of the Black Sea grain initiative and India's restrictions on rice exports. The increases punctuated a longer-term decline in commodity prices in the past year.