Navigating the red sky - uncertain winds for MO farmers

By Blake Jackson

The agricultural economy is akin to a nautical saying: "Red sky at night, sailors delight. Red-sky morning, sailors take warning." For Missouri farmers, 2024 and 2025 could be a blessing or a curse depending on their farm's situation. 

University of Missouri Extension economist Ben Brown paints a nuanced picture at the MU Crop Management Conference. He highlights factors affecting all farmers while acknowledging the diverse impact on individual operations. 

• Loan Landscape: Expect increased demand for operating loans due to doubled production costs. Higher interest rates, however, have driven a shift towards variable-rate loans, leaving farmers hopeful for a future drop in rates. While Brown predicts a flat interest rate curve, the risk of a further rise remains. 
• Land Values Soaring: Despite the interest rate hike, land values are projected to climb 3-6% in 2024, fueled by drought mitigation payments and land conversion to cropland. This benefits sellers, but buyers face a squeeze. Western Missouri sees particularly rapid growth, with some parcels flipping for significant profits in just two years. 
• Income Downturn Looms: Strong farm balance sheets built on high land values and past income won't carry over. Brown predicts a decline in farm income, with lower commodity prices and government payments squeezing margins. However, potential cost reduction offers a glimmer of hope. 
• Commodity Market Challenges: Corn prices are projected to fall year-over-year, dipping below $4.50 per bushel for the 2024-25 crop. A record South American soybean harvest adds pressure to the export market, potentially pushing soybean prices down to $11.39 per bushel from nearly $13 last year. 
• Livestock Sector Stumbles: The livestock sector faces a relatively flat feed picture, further straining the already struggling pork and poultry industries. Brown compares the current situation to the 1998 pork industry consolidation, highlighting the severity of the financial stress. 

Photo Credit: university-of-missouri