Low interest rates and government stimulus drove the grain markets to new heights in the United States in 2021. Otherwise known as the “Covid commodity boom,” record grain prices were a boon for the American farm belt. While 2024 will likely shape up to be a bumper crop year with corn especially, not all is well in the US farm belt. 

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Corn and soybean prices have fallen since 2021 and 2022, while the costs of farm essentials remain stubbornly high. Combine the two, and farmer operating margins are being eaten away at an uncomfortable rate. Many are now delaying capital investments, using less fertilizer or fungicide, and understandably focused on the month-to-month as opposed to enhancing productivity and profits over the long term. 

Another factor contributing to lower prices is robust corn production in Brazil. The South American giant expects to harvest 4.6 billion bushels this year – a drop of 12% from last year but still the second-best in the country’s history. Brazil exported more corn than the US last year for the first time, and during the previous 20 years, Brazilian corn production has increased by over 1,000%, with soybean production rising by 400%. 

The US always maintained a “reliability advantage” regarding Brazil. Transportation in Brazil is slow and underdeveloped compared to more mature markets. However, Chinese investment is shifting this, having invested billions in South America to boost output and competitiveness. 

The USDA expects net farm incomes to decrease by a quarter in 2024. Land rental prices continue to climb during a year when rainfall has been ample, leaving the drought-plagued year of 2021 memory-holed. 

As most farmers would attest to, everything could change tomorrow. Weather is always unpredictable, as are geopolitical events with major partners such as China. The White House is also in play, so any future policy decisions limiting supply and enhancing domestic competitiveness could result in a leap in grain prices. Meanwhile, crops across South Dakota, Iowa, Nebraska, Minnesota, Illinois, Indiana, and Ohio are at the healthiest in years.