Ag Economists Monthly Monitor

As Screwworm Inches Closer, When Could the U.S. Reopen the Southern Border to Cattle Imports?

Tue, 06 Jan 2026 20:49:11 GMT

A newly confirmed case of New World screwworm (NWS) in northern Mexico is renewing concern among U.S. cattle producers and policymakers, as the parasitic fly continues to inch closer to the U.S.-Mexico border.

As reported by Drovers, on Dec. 27, Mexico’s National Service of Agro-Alimentary Health, Safety, and Quality (SENASICA) reported a case of NWS in a 6-day-old calf with an umbilical lesion in the municipality of Llera, located in the state of Tamaulipas. The location is approximately 197 miles south of the U.S.-Mexico border, and a reminder that NWS is still a high threat to the U.S.

Critical Timing with Calving Season Approaching

NWS, which was eradicated from the U.S. in the 1960s through an extensive sterile fly program, poses a serious threat to livestock. The larvae infest open wounds, feeding on living tissue and often leading to severe injury or death if untreated. Calving season is considered a particularly vulnerable period due to natural points of entry such as navels and birthing injuries.

Seth Meyer, director of the Food and Agricultural Policy Research Institute (FAPRI) and former chief economist for USDA, says the new case raises a tremendous amount of concern as USDA remains vigilant on keeping NWS out of the U.S. But Meyer says the growing proximity of NWS complicates already difficult decisions for cattle producers at calving season , which is a critical time of the year.

“There are concerns not just from a consumer standpoint, but also about whether southern producers are willing to retain heifers during calving season if there’s a risk of fly exposure,” he says. “Calving is a point of access for these animals, and that risk matters.”

Those decisions could have longer-term implications for herd expansion and cattle supplies, Meyer notes. If producers decide the risk is too great and opt against retaining replacement heifers, it could tighten supplies further down the road.

“That’s the last thing you want,” Meyer says. “You don’t want people giving up on retaining heifers and turning away from herd rebuilding.”

The Possibility of Reopening the Southern Border

The U.S. most recently closed its southern border to Mexican cattle imports in May of 2025 due to the rapid spread of NWS in Mexico. There were additional closures and reopenings in July 2025 as the situation evolved ultimately halting trade again to protect U.S. livestock.

Here’s a timeline so far:

November 2024: NWS was first detected in southern Mexico, leading to initial border closures and trade disruptions.
Feb. 1, 2025: A temporary ban was lifted after agreements for inspections.
May 11, 2025: U.S Secretary of Agriculture Brooke Rollins ordered an immediate suspension of imports due to NWS spreading closer to the border.
July 2025: A phased reopening began but was halted again after new NWS cases were found farther north, leading to another immediate closure of southern ports to protect American livestock.

Considering the cattle just south of the border are being vigilantly monitored and inspected, the bigger threat of NWS crossing the Southern border could be through wildlife . Still, as NWS gets closer, USDA is keeping the border closed and remaining cautious.

When could the U.S. reopen the border? That’s exactly what Farm Journal asked economists in the latest Ag Economists’ Monthly Monitor and the responses were extremely mixed. It’s important to note the survey was sent out prior to the most recent detection of NWS.

33% of economists say USDA could reopen the border in February 2026
25% say it could happen April through June
17% think the border could reopen July through September
And 17% were unsure.

For policymakers, the situation adds another layer of complexity as they balance animal health, trade and producer confidence. While officials stress that there is no immediate threat to the U.S. herd, the latest detection underscores the importance of surveillance, rapid response and continued cooperation between U.S. and Mexican animal health authorities.

As Meyer puts it: “There are a lot of balls in the air right now,” and preventing NWS from crossing the border remains a critical priority for the livestock industry on both sides.

Follow Farm Journal’s extensive coverage of the ongoing NWS situation.

U.S.-Mexico Border Battle Continues As the Threat of New World Screwworm Intensifies

Wed, 24 Sep 2025 20:04:06 GMT

With New World screwworm (NWS) confirmed just 70 miles from the U.S. border , producers, government officials and industry leaders are taking action. Finding NWS along one of the most heavily trafficked commercial thoroughfares in the world from Monterrey, Nuevo Leon, to Laredo, Texas, is a red flag for the industry. Emphasizing the importance of maintaining strong safeguards, it’s time to plan for not “if but when” NWS crosses the border.

On Monday, Secretary of Agriculture Brooke Rollins confirmed protecting the U.S. from NWS is non-negotiable and a top priority for President Trump.

UPDATE ON SCREWWORM THREAT:

Protecting the United States from New World Screwworm is non-negotiable and a top priority for @POTUS.@USDA landed boots on the ground this morning in Nuevo Leon, physically inspecting traps and dispersing sterile flies after the detection of the…
— Secretary Brooke Rollins (@SecRollins) September 23, 2025

“The southern border remains closed to livestock trade, and we are aggressively expanding trapping and surveillance,” she wrote. “At the same time, we’re expediting operations at our sterile fly dispersal facility at Moore Air Base in Texas .”

On Tuesday, Secretary of Agriculture Brooke Rollins reported 80,000 sterile flies were released on “spot” and nearly 200 surge staff had been deployed to Mexico.

Thank you, @IngrahamAngle, for paying attention to this important issue. Due to multiple failures from our southern neighbors and failure to act in the last Admin, the devastating parasite New World Screwworm is knocking on our southern borders door. We’re not waiting, we’re… pic.twitter.com/ZO5Vx5oes8
— Secretary Brooke Rollins (@SecRollins) September 24, 2025

Mexico’s Response To New World Screwworm

According to Reuters, Mexican’s agriculture ministry said there is no risk of adult screwworm fly emergence due to the early detection of the infected bovine, which was confirmed on Sept. 21. The infected animal was in a shipment of 100 animals originating from the Gulf Coast state of Veracruz, according to the statement.

Fly traps in northern Mexico have not detected a single screwworm fly.

U.S.-Mexico Border Remains Closed to Cattle Trade

The Mexican border closure remains a topic of debate. The September Ag Economists’ Monthly Monitor found 80% of ag economists surveyed oppose reopening the border to Mexican cattle due to screwworm risks.

(Farm Journal)

The border closure has created significant division within the cattle industry with producers, feeders and industry leaders on both sides of the fence.

“We have some cattle people that are glad it’s closed. We’ve got others who are hit pretty hard and are not happy about it,” explains David Anderson, Texas A&M professor and extension specialist — livestock and food product marketing.

NWS is a threat the industry can not ignore, says the ag economist with more than 30 years under his belt.

“I think this is the most serious problem the industry has faced since I’ve been a livestock economist,” he stresses.

From his perspective, keeping the border open with heightened monitoring and surveillance could have potentially been more effective than implementing a total closure.

“If we go back and look at data from the early ‘70s, when we had a big screwworm outbreak in the U.S. and Mexico, the border was open,” he says. “I probably would have leaned to not closing the border to begin with. I understand why you would want to do that, but I don’t know that it’s ended up reducing the likelihood that we’re going to get screwworms, and yet we’re paying a price for that.”

According to Anderson the economic consequences to the border being closed are:

Significant loss of approximately 26,000 imported cattle weekly
Estimated 18% reduction in cattle placements in Southern plains
Contributed to tighter beef supplies and higher consumer prices
Substantial economic hit to cattle feeders and ranchers

At this point, he’s quick to admit keeping the border closed is the best option.

When it comes to reopening the border, Derrell Peel, Extension livestock marketing specialist with Oklahoma State University, suggests the decision is not straightforward.

“Given everything I’ve experienced, it’s probably prudent to leave the border closed,” he says.

He adds any reopening should be “under very, very controlled, limited circumstances.”

Peel emphasizes the need for a collaborative approach with Mexico.

“We’re kind of in it together, and so whether it’s here or there, we’ve got to work together,” he summarizes. “We’re going to need to control it in both places. Otherwise, it’s not going to benefit either one of us.”

He also points out not everybody in Mexico is sorry the border is closed. For example, cattle buyers in Mexico can source cattle cheaper because the border is closed.

“Keeping the border closed does affect the movement of cattle south of the border ... it builds a backstop for cattle movement north,” he adds.

Peel notes cattle from Central America to Panama have increasingly made their way to the Mexican market, which validates NWS movement in Mexico and why recent confirmation has occurred.

“The longer this goes on, the more the Mexican industry will adjust,” he says. “It might permanently change the way the [U.S. and Mexico] work together.”

Texas Rancher Weighs In On Impact of New World Screwworm

Texas rancher Wayne Cockrell says the parasite’s entry into the U.S. is inevitable, suggesting that winter and colder weather might temporarily delay the spread until next April or May. Cockrell, who serves as the Southwestern Cattle Raisers Association director and chair of the cattle health and well-being policy committee, recently joined AgriTalk to talk about NWS.

“We would much rather stop this on Mexico’s southern border than our Southern border,” Cockrell says.

Mexican feeder cattle traditionally represented 30% of Texas feedyard inventory, he adds, but with current restrictions, feedlots are adapting.

“I think a lot of those feedyards have moved to the dairy-cross side,” he adds. “They have had to change the way they do business.”

Noting the broader economic implications of the border closure, 1.2 million fewer cattle for Texas represents “about two weeks” of impact nationwide, according to Cockrell.

“Winter and sterile flies is what we need now,” Cockrell summarizes.

Your Next Read: The Smell You’ll Never Forget: A Calf Infested with New World Screwworm

Economists Fear the U.S. Will See a Recession in 2025, And That Could Eat Into Consumers' Demand for Meat

Tue, 01 Apr 2025 22:41:43 GMT

Consumer meat sales hit record-breaking levels last year. The craze for protein-filled diets has been a storyline that’s helped drive meat demand, which is good news for meat producers. Ag economists warn, however, the major limiting factor for meat demand, and meat prices, in 2025 just may be what happens in the overall economy.

The March Ag Economists’ Monthly Monitor asked economists if they think the U.S. general economy will see a recession in 2025, and 62% said yes.

Recent reports agree with that sentiment, as the Federal Reserve’s key inflation index rose more than expected in February and consumer spending posted a smaller-than-projected increase, according to the Commerce Department. Both could be warning signs of what’s ahead.

As a follow up question, The Ag Economists’ Monthly Monitor survey asked, “In what ways does the U.S. economy impact meat demand in 2025?” Respondents had no shortage of opinions on that.

Here’s a rundown of some of their reactions:

“If real wages fall, there will be a substitution toward other protein/cheaper meat cuts.”
“Slower growth (even if the U.S. does not endure a recession) will reduce consumer willingness to spend, especially at a time when beef prices, in particular, are high.”
“A downturn in economic growth impacts disposable income and should slow animal protein demand.”
“There is a positive correlation between GDP and meat demand, particularly between GDP and higher end cuts.”
“When the U.S. economy is strong and incomes increase, consumers have more disposable income to spend on meat and higher quality cuts of meat. When the U.S. economy is weak and disposable income tightens, consumers may reduce meat in their diet or turn to less expensive meat options.”

Not all economists expect U.S. consumer demand to fall off though, even if the U.S. officially enters into a recession.

“Labor income is growing faster than inflation. Most U.S. firms are profitable - at least as of current earnings reports,” said one economist.

Another shared, “I do think consumer demand will be lower in 2025 than it was in 2024. That being said - 2024 consumer expenditures and demand were a lot higher than I anticipated at the beginning of the year. Two indicators that are showing up, and are unsustainable right now, are reducing savings accounts and increasing credit card debt. I think it leads to slower meat demand in 2025, partially due to lower meat availability and partially due to slowing consumer demand. Notice I said ‘slowing’ consumer demand and not ‘declining/negative’. Demand does not have to decline year-over-year to impact meat prices. Slowing can do the same thing.”

The GLP-1 Effect
What could have an even bigger impact on meat demand, and even more so than inflation and a recession, is the use of GLP-1 drugs for weight loss. GLP-1 drugs not only moderate users’ blood sugar levels, but also affect their appetites by suppressing hunger cravings.

“U.S. consumer preference for meat demand is strong, though I would be paying attention to the growing use of GLP-1s as it relates to all agricultural product demand,” one economist responded.

The good news is studies have shown those who use GLP-1 drugs often crave healthier items and often consume more protein versus unhealthy foods.

Starting From a Place of Strength
Forecasting meat demand in 2025 relies on a number of factors. But a positive trend is how consumers, especially the millennial generation, are buying more meat. As PorkBusiness.com reported this week, consumers are buying more meat than ever. In 2024, meat sales hit a record high of $104.6 billion and total pounds sold increased by 2.3%, which was cited in the latest Power of Meat.

More people want meat today, but economists are concerned any economic pain could eat into overall meat demand.

10 Understated Things Economists Say Could Impact Agriculture in the New Year

Tue, 31 Dec 2024 12:47:56 GMT

This past year was definitely full of surprises, but there were also happenings in agriculture that economists warned about at the end of 2023.

The bleak outlook for commodity prices, along with elevated interest rates, created a downturn in the ag economy, which is something many economists warned would happen. It’s the speed of which margins crumbled that might have been the bigger surprise.

The latest Ag Economists’ Monthly Monitor asked economists if the U.S. was either in a recession or on the brink of one. The majority of ag economists say U.S. agriculture is ending the year in a recession.

56% of ag economists responded by saying agriculture is currently in a recession, which is up from the 53% who responded that way in October.
81% of economists surveyed said the U.S ag economy is on the brink of a recession, which is a significant jump from the 56% of economists who responded that way in the October survey.

One occurrence that wasn’t on anyone’s radar in 2023: H5N1. What was first thought to be a mystery illness impacting dairy herds in Texas was later confirmed as Highly Pathogenic Avian Flu, the first time the disease was detected in mammals.

At the end of 2024, what are economists watching in 2025? In Farm Journal’s latest Ag Economists’ Monthly Monitor, we asked economists: “What’s the one factor impacting the ag economy that’s not being talked about or covered by the media enough right now?”

From trade to deregulation plus numerous unknowns in a new administration, economists have no shortage of issues they’re watching in the new year.

Here’s What Economists Are Saying:

“The media seems consumed with the negatives of a Trump administration/Republican trifecta. It’s certainly good to be aware of the challenges with any political transition, but more forward thinking on what is positive, would be helpful: the outlook for taxes, biofuels policy, trade deals with agriculture included, deregulation all seem to be potential positives we could be talking about more.”
“Prospective tariff war is being downplayed, despite published research measuring expected range of damage.”
“Farmer attitudes toward alternative land use: CRP, solar and other forms to help diversify incomes.”
“Policy uncertainty is high right now. Will tariffs be imposed and if so, what will be the reaction of other countries? Will the new Administration take regulatory actions that favor or hurt the biofuel industry? What will be the outcome of debates over tax and budgetary policy? Will economic assistance to the farm sector be approved during the lame duck session or in early 2025? What about a new farm bill? Many people are making assumptions about how these questions will be answered, but we don’t know.”
“Farm income varies greatly by region. While we often focus on the Midwest and the financial health of that region, it is also important to notice that regions in the southern U.S. are really struggling.” It is also important to watch what production adjustments producers make to cope with today’s tighter operating margins?
“Could federal budget cuts/austerity dramatically change/reduce the federal farm income safety net?”
“Cash rent prices staying constant during a downturn in crop prices.”
“Let’s be clear — the clean fuels tax credit goes to the fuel producer, not the farmer. It enables market access into the biofuels market for the farm economy, but the ability for the farm economy to capitalize upon it is hamstrung by credit levels that have incentivized large inflows of foreign feedstocks at the expense of literally homegrown feedstocks like SBO.”
“The Brazil real is depreciating, which eventually leads to more U.S. competition.”
“China, Europe, Mexico and others know what to expect out of Trump. They’ve seen it before. Everyone is discounting the possibility that Trump’s tariff threat could result in some pre-emptive trade agreements that benefit us here in the states. The U.S. is the biggest buyer of consumer goods in the world. They can’t afford to cut us off. Note that I said consumer goods, not commodities.”

Your Next Read — Economic Loss Assistance Program Payments Passed by Congress: Here’s What Farmers Need to Know

Out Of The 10 Biggest Ag Commodities In The U.S., Leading Ag Economists Are Most Bullish On Beef Cattle

Wed, 27 Sep 2023 19:20:17 GMT

Ag economists’ view on the ag economy is starting to erode, but out of all the commodities, economists are most bullish on the cattle industry. That’s as leading ag economists from both the public and private sectors expect cattle prices to climb even higher in 2024.

The Ag Economists’ Monthly Monitor is a survey of nearly 60 ag economists from across the country, conducted by the University of Missouri and Farm Journal . THis month, they were asked to rank the 10 major ag commodities by financial outlook. Beef cattle came in at the top with dairy at the bottom.

“Cattle ranking so high was not a surprise, and dairy on the bottom, that part of the list was also not a surprise,” says Pat Westhoff, director of the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri. “Very high feed costs for dairy producers, milk prices were in the tank there this year. So, that makes very good sense. What was maybe a little bit of a surprise is that people were quite as positive about the soybean picture.”

For livestock, the ag economists revealed several things that could also impact prices between now and March, including:

Reduced supplies for beef, pork and chicken should offer price support
Consolidation and reduction could be seen in early 2024
Consumer economic health and demand

(Farm Journal)

Eroding Economic Outlook Overall

While bullish beef prices, the biggest story revealed in the September Monthly Monitor is the falloff in the ag economy — all three categories are lower than any of the previous three surveys. The Ag Economists’ Monthly Monitor shows lower row crop commodity prices, concerns about demand and a negative outlook for China’s economy are all contributing to the changing views, even as the cattle herd and U.S. corn and soybean crops continue to shrink. But the most influential piece of the farm economy might be the price of corn .

“I think a lot of things are coming together to make people more pessimistic about the short-term view of things,” says Westhoff. “We’ve got lower prices for some of the major commodities, such as corn, and that’s obviously a major player in all this. Higher interest rates aren’t helping as well. There’s just a general concern about the future of demand for U.S. agricultural products, which has probably gotten to be a more important concern this past month.”

Related Story: Ag Economists Turn More Bullish On Soybean Prices, Corn Prices Are a Big Red Flag

Economists say there are several factors driving agriculture’s economic health today, and will continue to do so over the next 12 months, including:

U.S. and global weather creating production challenges
Decline in many commodity prices
Below-trend yields for major crops in 2023
Strong cattle prices offset by lower prices of other livestock commodities
Generally high interest rates and input costs, despite some lower prices for fertilizer, etc., providing relief
Variable profitability across farm operations based on production challenges
Tight farm margins in some instances
Declining export demand
Uncertain international grain market factors
Increased production competition from South America

While there are several things that could impact the health of the farm economy, one economist says: “The biggest factor that will impact the health of the ag economy is the price of corn, by a long shot.”

What are the biggest drivers of row crop prices over the next six months? The September Ag Economists’ Month Monitor revealed the following:

Ongoing geopolitical tensions in China and Black Sea region
South America crop prospects for 2024, compared with new U.S. estimates of crop supplies
Export market demand changes
U.S. biofuel/energy policy, climate change policy and financial policy that could impact trade and domestic feed grain and oilseed use

(Farm Journal)

Economists fear higher interest rates could weigh on both livestock and row crops.

“Agriculture’s economic health is being impacted by weak demand for many commodities, which is suppressing prices. Low prices are especially challenging for farmers facing weather-related production challenges with fewer bushels or pounds to sell at those low prices. Although costs of production have come down, farm margins are tight,” says one ag economist in the anonymous survey.

Related Story: Could Cattle Prices Soar Through Next Year? That’s What Economists Think, And It Could Completely Change the Industry

Another economist says: “Building supplies of many commodities are leading to lower prices. Cattle and soybeans are the exception. Input costs, especially interest rates, remain high.”

Watch What’s Happening Around the Globe

One of the main themes that continues to surface in the Ag Economists’ Monthly Monitor is concern about global competition. As competition continues to beef up from countries such Brazil, it’s not just impacting grain exports, but also meat.

Arlan Suderman of StoneX Group says the increased competition globally is one of the main watchouts for grain prices.

“Russia is dumping record amounts of wheat on the world market and Brazil is dumping record amounts of corn on the world market, all while our livestock numbers are down which means feed usage is down,” Suderman says. “I think the positives are the biofuel issue that’s going to take some time to develop; we’re already seeing it on the soybean side. We hope to get some favorable decisions from the administration to support the corn side.”

So, what could change the outlook for lower corn prices? Suderman says there are several things, including what happens between Ukraine and Russia.

“I think the Black Sea war continues to escalate, with shipments of commodities out of Russia being curtailed. That’s a game changer if that continues to happen. The odds are very low right now, but those are slowly increasing the longer the war goes,” Suderman says. “On the other hand, tensions with China are increasing. I look for China to continue to try to diversify away from dependency on the United States for commodities, which means we needed to develop other markets domestic and abroad.”

Concerns About Deglobalization

One concern for U.S. agricultural exports as a whole, according to Don Close of Terrain Ag, is deglobalization.

“I think the slowdown we’re seeing in trade volumes, China is at the centerpiece, as well as the fallout that we could see from the Russia Ukraine situation. I have a lot of concerns about what we will see from Europe in the years to come. I think there’s a lot of stress factors there,” Close says.

The current economic meltdown in China is also a growing concern for many ag economists, according to the September Monthly Monitor.

“There are a lot of questions about what’s happening in China, and there are a lot of concerns that China’s economy has already slowed or will be slowing in the months ahead,” Westhoff says. “Since that’s a major demand driver, if that were to happen it might be a very strong negative. In this country, we’re seeing continued economic growth, but those high interest rates are indeed having an effect on household finances and will probably result in at least some slowdown in consumption over the next year.”

Big Crops Expected for 2024

In the September survey, economists were also asked to provide outlooks for 2024. As South America begins to plant next year’s crop, expectations are for Brazil’s big crops to just get bigger, at a time when costs at home are on the rise.

“The first thing is costs,” says one economist when asked to provide an outlook on the next 12 months. “Interest rates are higher and likely to increase some more, but fertilizer prices are lower. Lower feed prices are certainly providing some relief to livestock producers.”

Ag economists expect U.S. farmers to produce big yields in 2024, with the expectation for El Nino to play in producers’ favor.

The September Ag Economist’ Monthly Monitor shows a projection of trend yields for 2024:

Corn: 180.4 bu. per acre yield
Soybeans: 51.8 bu. per acre
Cotton: 837 pounds per acre

While operating costs are expected to stay high, the Monthly Monitor shows certain input costs, such as fertilizer, continue to trend lower for the 2024 corn crop.

When economists were asked to give their expectation for the 2024 corn budget versus 2023, the September survey shows economists expect the following changes:

Market revenue down 4.7%
Fertilizer costs down 21%
Fuel costs up 1.5%
Chemical costs up 3.2%
Operating interest cost up 8.4%

“We’ve seen a sharp drop in spot prices for fertilizer already, which translates to lower prices for fertilizer for next year’s crop,” Westhoff says. “That could be some significant cost savings for crop producers. Likewise, on the livestock side, the fact we’re projecting lower prices for grain and soybean meal suggests we could have lower feed costs in 2024 as well.”

Even with some relief expected on the fertilizer side, economists still think higher costs and lower commodity prices will eat into outlooks for 2024.

“Today, in areas where crop production is likely short, there is some financial deterioration between the guaranteed crop insurance levels and input costs. In areas with good production, such as Ohio and Indiana, their production will likely lead to some fairly good profitability,” says one economist. “In 12 months, lower crop prices are going to hurt 2024 crop profitability.”

Could Cattle Prices Soar Through Next Year? That's What Economists Think, And It Could Completely Change the Industry

Thu, 31 Aug 2023 16:03:46 GMT

The U.S. beef cow herd is now the lowest since 1962, and with the majority of ag economists now expecting rebuilding to take place until Q2 of 2024 or later, that means even higher cattle prices could be ahead. Ag economists say as the U.S. cattle herd continues to shrink due to drought and other pressures, the August Ag Economists’ Monthly Monitor revealed it could also cause massive consolidation in the cattle industry, not only with cattle producers, but also meat processors.

The August survey is the third survey of the Ag Economists’ Monthly Monitor , a joint effort between the University of Missouri and Farm Journal. The first-of-its-kind survey collects insights from ag economists across the U.S. Nearly 60 economists are asked each month to provide their forecasts and views. They represent a wide geography with expertise in grains, livestock and policy.

Cattle Prices Could Climb

Continued consolidation in livestock is a major concern for economists. The survey was completed on the heels of Tyson Foods and Smithfield announcing plant and farm closures for both pork and poultry . However, economists think consolidation in cattle will also be a major theme in 2024, and it could have an impact on major meat processors as ag economists think cattle prices could push even higher, a trend that could continue for at least another year.

The August survey also asked economists when they think cattle herd expansion will start to take place. The majority think cattle contraction will continue for at least another year. A smaller percentage think it could happen in the second quarter of 2024.

“It will probably be late 2025 or 2026 before we see significant increases in beef production. So if demand at all stays with us, we can be talking about these kinds of lofty prices for several months down the road,” says Brown. “I kind of wonder when we talk about changing structure whether or not the cow-calf industry will look different. So maybe bigger operations, perhaps some of the smaller beef cow operations will have retired. And we won’t see those back. So I’m curious to watch consolidation, what’s been probably the slowest segment of agriculture to consolidate over time.”

The survey shows ag economists think cattle prices could climb even higher over the next year.

“Not only have cattle prices been moving higher, but our economists have been upping their estimates of cattle prices to the tune of about $10 [per head] over the last couple of months,” says Scott Brown, interim director of the Rural and Farm Finance Policy Analysis Center who also helps author the Ag Economists’ Monthly Monitor,. “So a lot more optimism. I think that just has a lot to do with the short supplies of cattle that we’re beginning to see in the marketplace.”

Brown says economists are still concerned about the lack of profitability currently projected for pork producers, but they are turning more optimistic on prices.

“As we’ve done the last couple of months, prices have recovered and economists’ outlooks have gotten a little brighter, even though we’re talking about some fairly low prices. Dairy is the one that still sticks out as the worst, and our survey basically shows not a lot of change for prices with a projected $20 (per cwt) for the all milk price forecast for the next 18 months or so. If the costs stay where they are today, it makes that a pretty tough industry to participate in.”

Massive Consolidation?

What factors could impact livestock prices over the next six months? The main theme continues to be tighter cattle supplies and demand.

“Beef cattle supplies will continue to tighten, and beef production will continue falling. Beef demand remains remarkably resilient,” says one ag economist.
“Factors impacting livestock prices include U.S. herd liquidation, global meat availability and domestic demand,” says another economist in the anonymous survey.
“Consumer demand will impact livestock prices the most in the next six months,” the survey reveals.

“We asked folks a lot about what they see as important in the livestock markets as we look ahead, and we did see that consolidation word come up, especially in cattle markets,” says Brown “So although we’re talking about record cattle prices, and maybe at some point record profitability, although not today, I think there’s a lot of concern about what this does for the industry long-term.

“I think packers are going to be in an awful difficult spot here for a period of time,” Brown adds. “Feedyards could also be in a tough spot. It’s tough to keep yards full with the lack of supplies of feeder cattle. So the idea is that these industries are going to continue to adjust. And I think 2021 and 2022 were just such phenomenal demand years that they almost masked what were some very high costs faced by all of the segments of the livestock industry.”

Consolidation Concerns

The survey also asked economists to explain the reasoning behind their herd expansion forecasts. Consolidation was also a major theme as economists explored what the current state of the cattle industry could mean for the future of agriculture.

“I do think consolidation of all parts of the beef industry is coming. I think this will be a time when some of our well-established 100-cow operations will think about exiting,” says one economist.
“We will see prices that significantly surpass 2014-2015. Processing plants will consolidate due to fewer cattle available to process. Producers will be slower to expand than in 2014-2015 because of continued drought and higher borrowing costs. I expect the high prices to last longer than in 2014-15,” says another economist.
“Further reductions in slaughter will put continued pressure on beef processors while boosting prices for cattle producers,” one economist says in the anonymous survey.
“The impact of the smallest beef cow herd in 60 years will likely put pressure on processing and retail margins, may give a more competitive advantage to competing proteins, and could result in a smaller industry going forward,” one economist says.

The ag economists surveyed expect net farm income to hit $125 billion to $130 billion. According to Brown, that’s not the record $160.2 billion U.S. agriculture saw two years ago, but Brown points out that it’s still high.

“It just reminds me to say not as good as where we were a couple of years ago, but also maybe not as tough as some would have thought once we started to see these lower prices,” says Brown.

Corn vs. Soybeans Price Projections

Ag economists are more optimistic about soybean pries than they are corn prices, and one of the main reasons is demand. According to the latest Monthly Monitor, economists indicate soybean prices will trend higher not just this year but also for the 2024/25 crop. For corn, the survey shows the opposite with the expectation for corn prices to fall.

“On the crops side, the one to be optimistic about is soybeans,” says Brown. “According to the latest Ag Economists’ Monthly Monitor, economists say soybean demand is certainly stronger than we might see in a commodity like corn, as biofuels and renewable diesel will all continue to maybe drive some crushed demand as we look ahead.”

(Farm Journal)

Brown says, as a result, economists are also more optimistic on soybean prices moving forward compared to corn. Part of the concerns are due to an expectation for yields to increase, but the other is the negative outlook for demand.

“On the corn side, a little less optimism. I would say weak demand exports, in particular, seem to be a lot of what we have answered back from the survey. And the expected corn prices in the next 18 months ahead over the last three surveys certainly show a downward trend in what folks expect on the corn side,” says Brown.

Economists say the biggest impacts on crop prices will come from:

Demand domestically (including for feed grains) and abroad (particularly in China)
War in the Black Sea if shipments from Russia are curtailed
El Nino presence and weather in major crop production areas of the world
Strong competition in the international corn export market and U.S. export levels
U.S. crop acreage stable, better yields pushing down prices

Overall Outlook for the Ag Economy

Brown says the monthly survey shows economists’ views of the ag economy haven’t changed much in the three months of conducting the survey. The August data show economists are:

5% less optimistic about the health of the ag economy a year from now relative to today
10% less optimistic when looking at the ag economy today versus 12 months ago

(Farm Journal)

“I think the biggest thing to note is just how resilient we’ve been. And that shows in some of the answers we got back from the economists,” says Brown. “Although there’s been lots of concern about consumer demand and international demand for a lot of our commodities, the ag economy has been resilient.”

What Will Drive the Ag Economy Over the Next 12 Months?

The economists turned more bullish on livestock in the latest survey, while the outlook for corn prices produced more pessimism. But economists continue to be impressed with how farmers and ranchers have withstood higher costs on their operation.

“The financial strength on many farms is rather strong and many have taken advantage of relatively high prices for crops and cattle. Hogs and poultry are in somewhat worse shape now than last year. Looking ahead, I expect that lower crop prices and stable input prices will put a squeeze on high-cost crop producers. Consolidation across all of agriculture is something I expect to be a theme in the year ahead,” says one ag economist in the anonymous survey.

“We’re seeing an explosion of competitive production coming out of Brazil at the same time that geopolitical risks are increasing in a world facing mounting credit risks,” was how one economist responded to the question.

“The current most-important factors are weather and input costs. In one year from now, it will be Brazilian production policy,” says another economist.

“Agriculture is benefitting from somewhat lower input prices, but weather is creating challenges in production. During the next 12 months production costs should continue to moderate, but prices are also moderating so that the net change is slightly positive. A new farm bill needs to be completed to create more certainty and reduce revenue risk,” is another response from the anonymous survey.

Projecting the Positives Pieces for the Ag Economy

(Farm Journal)

With so much concern about international competition and domestic demand, economists also pointed out some positives in the ag economy, including farmland values and the U.S. economy.

“The land value market has a lot of supportive fundamentals under it and will withstand a couple years of negative farm income. As a result, farm balance sheets will stay rather healthy and those that have available working capital and cash will be positioned well,” says one economist.
“At least so far, the U.S. economy has proven more resilient in 2023 than many had anticipated,” was another response in the monthly survey.
“Lower fertilizer costs and a relatively stable U.S. economy,” says another economist.
“I see strong international markets for pork and beef as the most positive aspect regarding the outlook of U.S. agriculture,” one economist says.

Ag Economists Cast Doubt On Just How Much of a Reduction the U.S. Cattle Herd Has Seen in a Year

Fri, 21 Jul 2023 00:34:04 GMT

January’s cattle inventory report showed the smallest beef cow herd since 1962. As USDA prepares to release an updated look at beef cattle inventory this week, a survey of ag economists shows the possibility of only a small reduction year-over-year. If the forecast holds true, it could put a damper on forecasts for even higher cattle prices.

The July Ag Economists’ Monthly Monitor , which is a survey of nearly 60 ag economists from across the country, shows an average July 1 beef cattle inventory estimate of 30.1 million head. That’s slightly higher than what the same economists projected in June, which was 30 million head, but it’s not far from the 30.3 million head USDA reported last year.

“The Ag Economists’ Monthly Monitor for July pegs the beef cow herd at 99% of one year ago. That is a smaller decline in beef cow inventory than many of the pre-report estimates being discussed that are generally below 98% of a year ago,” says Scott Brown, a livestock economist with the University of Missouri and one of the authors of the Ag Economists’ Monthly Monitor. “The range of survey results is wide which may indicate the differences drought has played in different parts of the U.S.”

In January, USDA’s inventory report showed 28.9 million beef cows in the United States as of Jan. 1, 2023, down 4% from last year. The number of milk cows in the United States increased to 9.40 million.

If the results of the July Ag Economists’ Monthly Monitor are any indication of what USDA may reveal in its July report, Brown says it could have an impact on cattle prices.

“If the survey results are correct, it could spell lower prices in the months ahead relative to current expectations,” says Brown.

(Farm Journal)

The July Ag Economists’ Monthly Monitor also shows economists are more positive when asked about cattle and hog prices, but they have a more negative view on dairy, which they consider the biggest weight in the livestock sector.

“When you look at where pork prices have gone over the last month, it’s gotten more positive. Now, I don’t want to suggest we’re back in black ink, but we have seen recovery in things like the pork cutout value,” Brown says. “The economists continue to worry about how the general economy will affect livestock going forward, but overall, it seems we’re seeing a more positive view from the livestock perspective in this month’s survey.”

The survey also shows economists think feed prices will be the biggest weight on livestock prices, but they do think USDA is too low on their average livestock price forecast for the year.

The average fed cattle price estimate in the July survey was $176 per hundred weight on fed cattle, 70 cents higher than USDA’s 2023 forecast. And economists think the average hog price will reach $59.90 per hundred weight this year, $2 above USDA’s current forecast.

What to Watch Over Next 6 Months

While most economists think cattle prices will continue to trend higher, they were also asked what factors they view as the biggest driver of livestock prices in the next six months. The responses varied in the July survey, but highlights include:

• “Domestic and international demand growth slowing.”
• “For fed cattle, continued good consumer beef demand will be most important. On the feeder side, corn prices will be the most important determinant of higher or lower prices even though they will remain well above a year ago.”
• “Placements of cattle on feed will be a major driving factor because it will determine the number of replacements being kept on pasture rather than being placed on feed. This has the potential to end the contraction phase of the cattle for 2024/2025 where cattle inventory may begin to grow again.”
• “The main factor affecting livestock prices will be macroeconomic factors influencing consumer demand for meat. Consumer sentiment and consumer spending appear to be weakening based on recent anecdotal evidence.”

(Farm Journal)

Economists were also asked to share what they currently view as the most positive aspect of agriculture, including crops and livestock, one economist said, “Cattle markets are going to be extremely high in the coming year.” Another economist mentioned demand, saying, “The strength of U.S. meat exports is a real bright spot and is looking to continue to be positive going forward.”

Read the full results from the July Ag Economists’ Monthly Monitor .

Ag Economists Turn More Positive Longer-Term On the Farm Economy

Thu, 20 Jul 2023 20:01:20 GMT

The July Ag Economists’ Monthly Monitor shows weather extremes and wild swings in the commodity markets are the two biggest factors impacting short-term outlooks, but the economists surveyed expressed a more favorable view longer-term. The latest survey also shows the biggest wildcard for agriculture over the next year could be geopolitical risks tied to China and the war in Ukraine.

This is the second survey of the Ag Economists’ Monthly Monitor , a joint effort between the University of Missouri and Farm Journal. The first-of-its-kind survey collects insights from ag economists across the U.S. Nearly 60 economists are asked each month to provide their forecasts and views. They represent a wide geography with expertise in grains, livestock and policy.

This month’s survey showed several key changes from June. Economists say they believe USDA’s current corn and soybean yield projections are still too high, and they anticipate a drop in forecasted corn and soybean prices. The economists in the July survey also predict cattle and hog prices could continue to climb higher this year.

“To me, the biggest thing that sticks out in the July survey is the more positive view 12 months into the future relative to where we were in June,” says Scott Brown, University of Missouri agricultural economist who helps author the survey each month. “In the very short run, the economists are a little less positive than where they were in June. I think that has a lot to do with the weather and general market moves we’ve seen over the last few weeks.”

(Farm Journal)

The longer-term optimism revealed in the survey is despite economists’ expectations for two consecutive years of declining net farm income, falling short of the record set in 2022. The July Monthly Monitor forecasts net farm income to fall to $132.8 billion in 2023, which is below the $134.7 billion in the June survey and USDA’s current net farm income estimate of $136.9 billion. That’s still a big drop from 2022, when USDA says net farm income reached $162.7 billion.

This month’s survey also tried to peel back the layers of what commodities might be aiding the more positive long-term outlook versus weighing on the overall health of the ag economy in the short-term.

“On the crop side, it’s positive to very positive,” Brown says. “There are a few in the negative category, but a majority of economists responded the crops side of the equation looks positive. Whereas, on the livestock side, we have more negatives than we have positives.”

Economists say there are several positive developments that could shape U.S. agriculture, such as continued productivity and efficiency gains; a healthy farm economy and balance sheets; projected shifts in interest rates; new and expanded opportunities for renewable fuels; and the strength of the U.S. cattle market and meat exports as a whole. Geopolitical issues could also impact global crop production and, in turn, bring some demand back to the U.S.

Cuts to Projected U.S. Crop Yields

The survey was sent to ag economists the day after USDA released its most recent yield forecast in the July WASDE report. In what was called a rare move early in the growing season, USDA cut its corn yield forecast by 2.2% to 177.5 bu. per acre, down from 181.5 bu. per acre in the June report. The July Ag Economists’ Monthly Monitor is nearly 3 bu. per acre lower than USDA, with the group of ag economists projecting a yield of 174.9 bu. per acre.

“For me, the interesting piece of this story is there’s a lot of variability in the responses from those being surveyed, which highlights how varied the weather has been as you move around the country,” Brown says. “We had yield estimates slightly below 170 bu. per acre on the low end and some above 180 bu. per acre on the high end.”

(Farm Journal)

Brown says the soybean estimate also came in lower than both USDA’s July WASDE report and the June Ag Economists’ Monthly Monitor survey. USDA estimates soybean yield at 52 bu. per acre, and the average ag economists’ estimate is 50.6 bu. per acre, a 0.5 bu. cut from the June survey.

“There was a little less variability from top to bottom on those yields, but when you look at prices, even with what was a lower corn yield, their estimate of 2023/2024 corn prices went from $4.99 in June to $4.80 in the July survey,” Brown says.

(Farm Journal)

What Economists are Watching the Next Six Months for Crop Prices

When asked what factors will impact crop prices in the next six months, economists said:

Final yields
Export demand and competition
Weather domestically and abroad
Geopolitical risk in the Black Sea and China, including developments that impact ag exports in Ukraine/Russia

“I think a couple of things stick out beyond the weather discussion, and one is export demand as well as global competition, such as what’s going to happen with South America in terms of competing with U.S. corn and soybean markets.

“The economists certainly continue to talk about the geopolitical risk in the Black Sea and China, in particular, and what that means for our ability to export corn and soybeans as we look ahead,” Brown says. “Those are really the two big ones that came out of this survey.”

What Livestock Economists Are Watching the Next 6 Months for Livestock

Ag economists think the following factors will impact prices the next six months:

Changes in feed costs and impact of corn prices
Rising milk prices
Consumer meat demand and influences from macroeconomic factors, both domestically and abroad
Placements of cattle on feed

Brown says while the majority of economists are concerned about feed costs and the impact on livestock producers, the second-biggest concern revealed in the survey is demand. Economists pointed to both domestic and international demand as possible problem areas.

“2021 and 2022 were extremely positive from a demand standpoint, and we seem to be backing up a little bit in 2023,” Brown says.

Economists More Bullish on Cattle and Hogs

The July Ag Economists’ Monthly Monitor shows economists are more positive when asked about cattle and hog prices, but they have a more negative view on dairy, which they consider the biggest weight in the livestock sector.

“When you look at where pork prices have gone over the last month, it’s gotten more positive. Now, I don’t want to suggest we’re back in black ink, but we have seen recovery in things like the pork cutout value,” Brown says. “The economists continue to worry about how the general economy will affect livestock going forward, but overall, it seems we’re seeing a more positive view from the livestock perspective in this month’s survey.”

(Farm Journal)

Based on the July monitor, economists expect average milk prices to fall back to 2021 levels, but production costs will continue to be higher in 2023 versus 2021.

“No. 1, the economists continue to worry about feed costs,” Brown says. “We continue to see fairly high feed costs affecting profitability. So even in the case of beef cattle, where we’re talking record cattle prices, we’re not talking record profitability because of the feed cost side.”

(Farm Journal)

Longer-Term Look at the Health of Agriculture

Over the next 12 months, there are several things that could shape the health of the ag economy, according to the July survey:

Crop prices and production costs, including inputs, rental rates, land values and supply chain disruptions
Subsequent impact on producer margins and the protein sector from rising interest rates and inflationary pressure
Weather considerations, including drought conditions in the short run and yield impacts in longer run
Geopolitical tensions and competitiveness of U.S. ag exports
Changes in consumer demand domestically and abroad, new markets for agricultural products, including biofuels

“One thing that came pretty strongly out of the survey is the continued increases in productivity in agriculture, which makes us more efficient,” Brown says. “The farm economy is generally healthy, and when you look at balance sheets, they are still really, really strong in many cases. That’s despite a lot of the issues we’ve talked about.”

In the July survey, economists voiced more concerns about interest rates and the impact on operating loans. One economist also mentioned the industry might be underestimating the negative impact Proposition 12 could have on the entire livestock industry.

The Turbulent Relationship Between the U.S. and China

While none of the ag economists surveyed think the U.S. will enter into a trade war with China in 2023, economists continue to remain cautious about China, which could have a direct impact on U.S. agriculture.

When asked to list the top factors shaping trade relations between the U.S. and China, economists said:

POTUS and political polarization in the U.S.
Non‐agricultural geopolitical tensions, including national security concerns, support of Taiwan and limits on technological production
Changes in China’s economic growth, including population and demographics
Russia’s invasion of Ukraine and Russia’s relationship with China
Quality, price and availability of U.S. products compared with global competitors

Potential Events/Factors Not Getting Enough Attention Today

The July survey also asked economists to outline any factors or events that currently aren’t receiving enough attention but could shape agriculture over the next 12 months. One economist brought up impacts of geopolitical risks and fallout from the war in Ukraine, but also a potential war between the U.S. and China.

Other potential events that could cause a major shakeup in agriculture include:

Weather events, domestically and abroad, warranting a broader conversation on climate
Potential for a significant recession in China
Focus on renewable diesel obscuring importance of RFS in overall biofuel use
Workforce concerns for producing, processing and transporting agricultural products domestically and abroad
Declining EU pork production and commerce implications of Proposition 12
Strikes at shipping ports in Vancouver and potential for upward pressure on potash prices with reduced production capacity at Nutrien mines in Saskatchewan

Previous Ag Economists’ Monthly Monitor Coverage

Most Ag Economists Think It’s Unlikely the 2023 Farm Bill Will Be Written in 2023

High Production Costs Could Weigh on the Ag Economy Through 2024, New Survey of Economists Finds

High Production Costs Could Weigh on the Ag Economy Through 2024, New Survey of Economists Finds

Wed, 28 Jun 2023 19:15:23 GMT

Stronger cattle prices combined with the recent run-up in crop prices aren’t enough to outweigh concerns about the impact high input prices will have on farmers this year and into 2024. While most economists agree the next 12 months could produce more financial challenges for agriculture, views vary on how much financial pressure producers will see and offer differing opinions on the U.S. crop production picture and commodity/feed prices.

The results are part of the June Ag Economists’ Monthly Monitor, a new survey of nearly 50 agricultural economists from across the country. It’s the first survey of its kind, collecting insights from economists who represent both the private and public sectors. The economists represent the ag sector across a wide geography and also have expertise in grains, livestock and policy.

The survey is conducted anonymously to allow the highly respected agricultural economists to speak more openly about their economic and production forecasts since their responses won’t be attributed to the university, company or organization they represent. The Ag Economists’ Monthly Monitor is a joint effort between the University of Missouri and Farm Journal . The university conducts the survey, collects and crunches the data while Farm Journal distributes the results.

Main Takeaways from the June Survey

Highlights from the first Ag Economists’ Monthly Monitor include:

The perceived financial health of U.S. agriculture is trending lower and is expected to continue to decline over the next 12 months.
Production costs, global competition, geopolitical risks, drought and demand headwinds are among the main drivers.
The majority of agricultural economists expect farm income to drift lower, with some expecting levels to land closer to the five-year average in 2024.
High production expenses are the biggest obstacle in 2023.
2023 crop yield estimates vary widely among the economists surveyed.
Economists expect crop prices to drift lower in 2023 and 2024.
Beef cow supplies are forecast to continue to decline this year.

A Current and Future Snapshot of the Agriculture Economy

The monitor shows the perceived financial health of U.S. agriculture has moved slightly lower over the past year, and economists expect that trend to continue over the next 12 months.

(Farm Journal)

The main drivers of the waning outlook include production costs, global competition, geopolitical risks, drought and domestic demand for agricultural commodities.

“I think what’s most surprising is that, on average, those more than 40 economists are in alignment with the more general perception of where agriculture is heading,” says Scott Brown, an agricultural economist with the University of Missouri, who helps author the survey. “What surprised me is the amount of volatility around that average estimate. It just reminds me there’s so many issues at play today, and when trying to predict or suggest the future, even these economists have a wide opinion in terms of where we’re headed in different commodities.”

Falling Net Farm Income

The Monthly Monitor shows all respondents expect farm income to decline from the record level of 2022 for 2023 and 2024. The range of survey responses is what produced the most volatility, with responses varying by as much as $51 billion from the highest to the lowest estimate.

Some economists are projecting farm income levels to return to the 2017-21 average in 2024. The main driver for 2023 forecasts is the expectation for higher production expenses. The biggest factor for the waning outlook in 2024 is the outlook for lower commodity prices.

“It seemed like cattle was the most optimistic commodity out of the mix,” Brown says. “I think there was still some expectation that corn and soybean prices could stay on the higher end, but generally there’s less optimism than coming off the records we would have seen back in 2022. That’s when farm income was a little north of $160 billion, and when you look at some of the forecasts for 2024 in our survey, it’s closer to $120 billion on average. Some are even suggesting farm income levels could fall back to where we were pre-2020, so pre-COVID.”

(Farm Journal)

Wide Range of Yield Estimates

Ahead of USDA’s updated look at planted acres in the June acreage report set to be released Friday, economists don’t see many big changes compared with what farmers intended to plant in March. According to the June Ag Economists’ Monthly Monitor, the average survey result was 92.05 million planted acres for corn, which is up slightly from the 92 million acres reported by USDA’s farmer survey in March. The range included 90.5 million acres on the low end and 93 million acres on the high end.

Economists think farmers planted 87.98 million acres of soybeans this spring, slightly higher than the 87.5 million acres reported in March. The highest estimate was 89 million acres of soybeans, with the lowest estimate of 87 million acres.

In March, USDA reported farmers intended to plant 11.26 million acres of cotton. The survey showed economists think with the weather challenges in areas such as Texas, cotton farmers actually planted 11.24 million acres, with the maximum response of 11.9 million and 10.95 million on the low end.

Brown points out the yield variation largely depends on upcoming weather, but the dry weather is creating a wide range of yield estimates this year. According to respondents in June, the average estimate for yield includes:

Corn: 178.68 bu. per acre versus 181.5 bu. per acre (USDA’s current estimate)
Soybeans: 51.06 bu. per acre versus 52 bu. per acre
Wheat: 44.47 bu. per acre versus 44.9 bu. per acre
Sorghum: 68.17 bu. per acre versus 69.2 bu. per acre
Cotton: 855.18 pounds versus 841 pounds

“I think when you look at both corn and soybean acres, there wasn’t a lot of deviation from the Prospective Plantings report USDA came out with a few months ago, so we didn’t see a big change there,” Brown says. “On the yield side, there are certainly some differences. The average yield estimate, on the corn side from the survey was a little more than 178 bu. per acre, with a downside of 175 bu. Likewise on soybeans, that came in at about 51 bu. per acre. Both corn and soybeans are below where USDA currently sees yields. I will say those are going to change quickly as we look at weather and what’s occurred since the survey would have gone out roughly a week ago now.”

(Farm Journal)

Economists also expect crop prices to decline this year and next; however, there is a wide range in estimates signaling volatility will continue.

The average corn price is estimated to hit $4.99 per bushel for the current crop year and $4.74 for 2024/2025. The high range of the estimate for this year is $6 per bushel, with a low of $4.25 per bushel. Soybeans are also expected to trend lower, with an average estimate of $12.52 per bushel this year. The high came in at $14 per bushel. The low estimate was $10.85 per bushel. The average estimate for 2024/2025 is $11.90 per bushel.

Wheat prices are estimated to average $7.63 per bushel this year, with a low of $7 and a high of $8.49. The average estimate for wheat prices in 2024/2025 is $7.10 per bushel, with a high of $8 and a low of $6.49.

(Farm Journal)

Mixed Outlook on Livestock

The June Ag Economists’ Monthly Monitor also asked economists to provide estimates about beef cow inventory as of July 1, which is a report USDA will release on July 21. Economists who responded expect cow inventory to fall to 30 million head, which represents a decline of 1.2%.

Respondents also see fed cattle prices in 2024 trending to over $181 per hundredweight. But responses also produced high volatility, with one economist even thinking fed cattle prices will average above $195 per hundredweight in 2024.

Most everyone expects a contraction,” Brown says. “With the dry weather we’ve had in cattle country, Oklahoma, Kansas, Nebraska, Missouri, to name a few, I think we will continue to see fewer beef cows when we get that report out in mid-July. There were some who are even calling for larger declines than the nearly 30 million head. It reminds me we’re going to get tighter, and we’re not done talking about record cattle prices if these forecasts hold true.”

(Farm Journal)

Economists are less optimistic about hog prices and milk prices producers will receive this year.

Ahead of the next Hogs and Pigs report from USDA later this week, economists think the breeding hog inventory will be 99.27%, compared to 100.5% one year ago. Economists are more bullish when it comes to exports, but not enough to improve their outlook on hog prices.

“They weren’t as optimistic on cattle or dairy,” says Brown. “When you look at what they were saying for 2024 hog prices, still, the average was below $61. Which if costs stay where they are today, that means red ink continues into 2024. Likewise, the projected all milk price for 2024 is $20.50 in our survey. That probably also makes red ink in 2024.”

The Likelihood of a U.S. Recession

Another major economic indicator for livestock producers is the general economy, as it historically has a direct impact on domestic demand. Of those surveyed, economists expect interest rates to move up 2% over the next six months.

“Although there was a wide range of responses, most economists felt the U.S. economy is not currently in a recession and will not enter one during 2023,” Brown says. “I will point out, though, there appears to be continued uncertainty about the expected general economy health for 2023, given survey responses.”

The majority of economists “somewhat disagree” the U.S. will enter into a recession this year. While at least eight economists say they “somewhat agree” a recession is looming yet this year.

(Farm Journal)

Looking Ahead to July

The June Ag Economists’ Monthly Monitor survey is a current snapshot of economists’ views. The survey will be sent to participating economists just days after USDA releases its WASDE report each month. Less than two weeks later, the results will be released.

“It is fairly current, but I’ll just say weather matters a lot, as we talked about, especially with yields. We’ll see how this changes, being able to now come back to the same group and ask what they expect corn and soybean yields to be in another few weeks. We’ll also have the first survey under our belt, and it will be interesting to watch those changes,” Brown says.

Looking to the second survey, Brown says he’s interested in watching changes to the crop-yield side of the equation. Longer-term, he thinks the monthly monitor will reveal bigger trends about the general economic health across all of agriculture and how those forecasts change from month to month.

“I’m really curious to watch [the general economic health] as we get more observations, and see what July looks like relative to June in terms of overall economic health,” he says. “I’m curious to watch as this group of experts continues to digest what’s happening in agriculture.”

Majority of Ag Economists say U.S. Agriculture is Ending the Year in a Recession

A sharp drop in net farm income among row crop farmers has held a hefty grip on the ag economy this year. 2025 isn’t forecast to be much better, with margins expected to be in the red again for all major row crops. The high input and high interest rate environment, coupled with low commodity prices, is a recipe that could also mean more consolidation in agriculture in 2025.

The eroding health of the overall farm economy was the emphasis of the latest Farm Journal Ag Economists’ Monthly Monitor, which is a survey of nearly 70 leading agricultural economists from across the country.

When asked if agriculture is either currently in a recession or on the brink of one:

56% of ag economists responded by saying agriculture is currently in a recession, which is up from the 53% who responded that way in October.
And 81% of economists surveyed said the U.S ag economy is on the brink of a recession, which is a significant jump from the 56% of economists who responded that way in the October survey.

One of the main reasons more economists didn’t respond that ag is already in a recession, is the fact the livestock sector is doing better than expected at the beginning of the year.

Farm Journal asked economists to weigh in on whether they thought agriculture is currently in a recession. Economists in the anonymous survey said:

“A recession is a sustained period of economic decline. We may not be able to say the entire agriculture sector is in recession, but the row crop sector has been in economic decline since 2022 and looks like that will continue into 2025.”
“I would argue we are largely already there...incomes have already fallen...used machinery values have fallen...but there is room for more decline from the livestock sector should those prices turn lower. Land values holding up are probably the one thing in my opinion that has yet to give, and that MAY only be a matter of time. “
“Farm income has already dropped considerably from the 2022 peak, and the crop sector is seriously affected. There are many downside risks in 2025 that could make a difficult situation worse.”
“I believe we are already in a recession. Farm income is and has been declining, and I don’t see a reversal of this in the next 12 to 24 months given policy uncertainty, surplus inventories, large ex-U.S. production, and likely declines in export viability.”
“Higher interest rates are making it hard to manage debt that is outstanding and likely to come with next year.”
“Some producers have not built an adequate asset base to weather these low returns and will be forced to change their business in an attempt to survive.”
“Negative profit margins relative to recent years are driving capital investment and land prices lower, reducing the financial position of agriculture amid lower income.”
“Specifically for the row crop sector, we are looking at another year of negative returns and that really wears on liquidity and puts pressure on longer term solvency.”
“Prices are too low to pay input costs and create a profit. At the moment, producers are fighting to break even.”

However, not all economists agree agriculture is in a recession. One economist points to land prices as the reason why.

“It is hard to say that agriculture is facing a recession when land prices are holding the way they are,” said one economist in the anonymous survey. “It appears that (many) full-time, commercial-scale row crop producers have used their working capital on recent land purchases and have nothing left to withstand a financial shortfall. Frankly, the current conversation about passing economic relief will go to those that have overextended their means to buy land the last couple years.”

Concerns About Consolidation

Another year of negative margins could create more consolidation in the row crop sector, according to economists. The latest Ag Economists’ Monthly Monitor found 94% of economists think the current environment of low commodity prices and high input costs will accelerate consolidation in row crop operations and allied industries .

“Some farms are expanding while others are leaving the industry. It is interesting to compare the percentage of U.S. businesses that go broke in the first 10 years to the percentage of U.S. farms that go broke in the first 10 years. The role of government intervention has really limited the realized risk in agriculture and, as a result, lowered the ability for young producers and ranchers to get into agriculture and increased the consolidation of land.”
“A sustained period of high costs and low prices will likely result in some farmers going out of business sooner than expected, which may be due to point of financial need or stopping by choice ahead of that. When farm consolidation is accelerated, there are fewer farmers buying inputs. Even if the acres are the same, fewer input retailer are needed to serve the customer base. Also, we have greater pressure on the whole industry as big farmers grow.”
“Low-cost producers, and those without any land rents or borrowing costs, are better equipped to weather a downturn in the farm economy.”
“Average margins are typically higher for larger farms. They also have more ability to borrow money.”
“The only way to survive is to increase quantity (number of bushels) and low margins.”
“Those who have managed well, kept production costs low, and have responsible cash balances should be in a good position to expand, absorbing those who made poor choices or experienced bad luck. Lending and federal disaster payments could delay this some. So, the magnitude of this is uncertain.”
“People will always be entering and leaving the industry, but when returns are low, more people leave because they have to, rather than because they want to.”
“The last time we were at the start of a commodity down cycle in 2014/15, it presaged a wave of consolidation in input developers over the next several years, such as Bayer/Monsanto; Dow/Dupont; ChemChina/Syngenta; Mosaic/Potash.”
“Operations and allied industries will expand to find additional economies of scale, one of the few options on the table to help with the tough financial situation.”

What to Watch in the Ag Economy in 2025

The health of the farm economy into the new year relies on a number of factors. What happens in South America with crop production will have a major impact on commodity prices in the U.S. However, economists said there are other factors to watch, including what happens with the incoming Trump administration.

Nov./Dec. Ag Economists’ Monthly Monitor

(Lindsey Pound)

When asked, “What are the two most important factors driving agriculture’s economic health today as well as in12 months,” economists said:

“South American production and input costs.”
“Farm financial conditions: there’s been a little price improvement recently, but still high costs mean 2025 is likely another year of negative margins for row crop producers. 2. Relative global competitiveness: We continue to see cropland area expansion in Brazil and, at the same time, they have a more favorable biofuels policy and are expanding trade agreements.”
“Congressional efforts to deliver economic and natural disaster aid, and U.S. agricultural export markets.”
“Declining commodity prices and associated margin squeeze.”
“As a sector as a whole, the livestock sector returns are important to the overall health in the short run. In 12 months, how the markets adjust (input prices, crop prices, and cash management/debt levels).”
“Demand side: uncertainty about renewable energy policy and potential international market loss through trade disputes. Production side: outlook for labor availability, given political rhetoric. Overall margin compression on lower commodity prices (likely larger Brazilian production forthcoming) and sustained high interest rates.”
“If 2018 is any indication, in 12 months we are likely to see adverse effects of tariffs, as well as immigration policy changes.”

Future of the Farm Bill

The Ag Economists’ Monthly Monitor also asked economists to weigh in on when they think Congress will pass a new farm bill, as well as if Congress votes on an extension this year, is it necessary to raise reference prices for producers.

Nov./Dec. Ag Economists’ Monthly Monitor

(Lindsey Pound)

Nov/Dec Ag Economists’ Monthly Monitor

(Lindsey Pound)

See previous results from Farm Journal’s Ag Economists’ Monthly Monitor.