US corn growers could sink deeper into red on downturn

Spanish Market: Agriculture
03/09/24

A more than 10pc drop in new-crop corn futures since early May has chipped away at early-season sales revenue estimates, potentially pushing domestic growers deeper into the red amid another season of elevated expenses.

US corn farmers face a $1.77bn cut in projected sales revenue based onpreliminary estimates for the 2024-25 crop as growers vie to liquidate old-crop inventories — pressuring new-crop 2025 futures values to the lowest level within the last two years.

The incremental dip in projected revenue has outpaced lower expenses and steepened projected losses for domestic corn growers, with estimated losses on a per-acre basis primed to slump to -$111.86/acre before considering government assistance, according to an Argus analysis of US Department of Agriculture (USDA) data.

Current conditions mark a reversal from the prior three seasons for corn growers and has sparked concern for another lengthy downturn in grain markets, according to Purdue University's Ag Economy Barometer survey.

Farmers surveyed in August "expect this year's farm income downturn to last for an extended period" after enjoying multiple seasons of above-$200/acre profits from 2021-22 — which were preceded by seven consecutive years of double-digit losses from 2014-20, according to the USDA.

"Over the last several months, farmers' concerns about weakening commodity prices have become more evident," Purdue reported today. "In the August survey, producers' concerns about commodity prices nearly eclipsed what has consistently been their top concern: high input prices."

Growers this year have grappled with the weakening grains market by extending and taking out new non-real-estate loans. Demand for new operating loans was above normal, outpaced real estate loan demand through the first half of the year and is expected to remain strong through the third quarter, according to the Federal Reserve Bank of Chicago — which represents growers from Iowa, Illinois, Indiana, Michigan and Wisconsin.

Corn prices will continue to face above-average inventories and record yield estimates, which has forced growers to liquidate inventory to clear space for this season's crop.

A silver lining, though, is lower acreage from other major corn producing countries, which could stem the current downtrend in corn values.

Argentina, which is the third-largest exporter of corn, could slash planted acreage by up to 50pc on price and pest concerns, while Brazilian farmers face worsening weather conditions that could erode planted area for the upcoming season.

By Connor Hyde

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