As we approach the end of 2024 harvest prices for the 2024 corn and soybean crop are at the lowest level in five years. This places them below the break-even level for many farm operations. In addition, some areas of the country are dealing with reduced crop yields in 2024 due to drought, late planting, excessive rainfall and even flooded fields. However, market prices may remain depressed because primary production areas anticipate above-average 2024 yields.

If these lower commodity prices continue into 2025, the financial strain on producers could become a bigger concern. Higher input costs compound the problem. While fertilizer costs have moderated during the past year, input costs for seed, chemicals, fuel and labor remain at elevated levels. USDA is projecting total U.S. net farm income to decline by over 25 percent in 2024, compared to 2023 net farm income.

Short-term interest rates on operating lines of credit continue to remain high. Credit needs are of increasing importance in the face of higher input costs. While fertilizer prices have stabilized this last year, input costs and labor continue to increase.

If corn and soybean futures prices remain low in early 2025, crop insurance guarantees for the 2025 crop year will fall short of 2024. This adds to the financial risk management that producers face. It may also cause concern for ag lenders providing the necessary capital for crop production.

Read more about the challenges that lie ahead here.