A snapshot of prices received by farmers for their crops reveals broad profitability challenges in the agriculture sector as producers brace for a record drop in income.
Prices paid to soybean and corn growers in July plummeted over last year, depending on the type of grain. Specialty crops like lettuce, broccoli and cantaloupes also experienced sharp declines.
In most cases, farmers are expecting bountiful harvests this year, but heightened global competition and weakening demand has depressed commodity prices and limited producer returns. A barometer of farmer sentiment by Purdue University and the CME Group found that producers' economic expectations dropped to levels last seen from fall 2015 to winter 2016, the start of a significant downturn in the U.S. farm economy.
Primary concerns among farmers are also shifting, with more producers worrying about lower prices compared to higher interest rates or increased input costs.
"Farmers are concerned about the possibility of extended weakness in farm incomes, similar to what took place from 2015 to 2019,” James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture, said in a statement.
Here's a brief look at farm prices in July:
Grain and oilseed
At $11.30 per bushel, soybean prices are 50 cents lower than June and $3.40 lower than the previous year. Record global growth in soybean production is increasing competition and hurting profits especially as top buyer China moves to purchase more commodities from Brazil.
A similar story is playing out in corn, which is down $1.98 from July 2023 to $4.24 a bushel. Prices for food grains such as rice and wheat are also down, with wheat $2.09 below last year's prices and rice $5.20 lower.
"Unless conditions change, I believe we’re heading into a perfect storm, a storm that I don’t think will be fully appreciated until early next year when farmers try to get loans but are unable to do so because they cannot demonstrate the ability to cash flow," Dana Allen-Tully, president of the Minnesota Corn Growers Association, told Congress during a hearing on farm income.
Specialty crops
Prices received by fruit and tree nut producers were more of a mixed bag in July, with some growers enjoying higher prices as a result of higher export demand and more favorable weather conditions.
Prices for oranges, strawberries and peaches all increased in July, as did returns for tomatoes and cucumbers. Orange prices rose to $20.82 a box, a significant jump from last year's $14.03.
However, prices declined for broccoli, celery, cantaloupes, grapes, apples, grapefruit and lemons. In some cases, like grapes and lemons, prices in July were lower than the previous month but higher than what they were in 2023.
Growers of almonds, walnuts, pistachios and other tree nuts again saw lower profits on their crops, with higher production depressing prices. However, increasing export opportunities in India and elsewhere could give the sector a boost in the future, according to a USDA outlook.
Meat and dairy
Cattle prices are significantly higher as smaller herds tighten overall supply. The July beef cattle price of $193 per hundredweight is $12 higher than last year. Strong prices have encouraged ranchers to sell livestock rather than expand herds, which could shrink supply even further.
Chicken prices have also risen over a year ago, bolstering meat giant profits as they contend with beef supply issues. The July broiler price hit about 77 cents per pound, roughly 10 cents above last year.
Meanwhile, robust hog supply has pushed pork prices lower. The July hog price of $68.40 per hundredweight is $5.90 lower than last year, as producers report more pigs per litter and face other challenges such as increased U.S. regulation.
In dairy, prices increased $5.50 over last year but remained unchanged compared to June. Lower projections for the number of milking cows as well as the expected milk per cow have pushed prices up. The dynamics are expected to push up prices for cheddar cheese, nonfat dry milk, and dry whey.
