Harvest is upon us in the Midwest.  Yields are expected to be above average for most producers, which is great news!  Unfortunately corn, soybean, wheat, rice and cotton prices are all below cost of production.  You might read that USDA says farm incomes are up for 2025 and overall, that is true, however that is largely due to much higher livestock incomes and the federal support payments last spring at $30 B.  For the row crop producer these are very challenging financial times.

Why are prices so low?  US production is good this year and the increase in supply certainly negatively impact prices.  In addition, the tariffs implemented by the Trump administration created some trade wars and many countries retaliate by not buying US farm commodities.  China has yet to buy a single bushel of soybeans from the US since the trade war started.  This is highly unusual.  Last month China bought 12 MMT of beans from Brazil, which is a lot in a given month, but zero from the US.

The tariffs create two problems for US producers.  First, and most obviously, they create a higher price for what we want to buy from the other countries.  Many fertilizers and pesticides are produced abroad and therefore we are seeing input prices remaining high, which leads to higher breakeven prices for our commodities.  Second, these tariffs lead to a “trade war” where countries will simply not buy from the US certain things.  In a world where soybeans, corn, wheat, cotton and rice are available from other sources it is easy to use them (not purchase any) in a trade war against the US.

It is my opinion that the low price is in for both corn and soybeans.  USDA projected high yields in the August crop report which may be hard to achieve due to late season weather challenges.  If yields were to slip somewhat and China made their typical purchases of US soybeans, we could see a dollar or more increase in price!  That would put producers closer to breakeven and energize the farmers.  This would require some sort of settlement in the trade war, which could happen, but is unknown as of this writing.

This same trade situation developed in 2018 under the first Trump administration.  You might recall that USDA issued Market Facilitation Payments as an “offset” to the price declines due to the trade war.  This type of subsidy is once again being discussed and last week there was a large meeting of Arkansas rice farmers requesting some help immediately due to the dire circumstances they are facing this fall.  Will the USDA issue more support??  That is also an unknown, but I feel more confident in that happening than the trade war settlement near term.

There will be a lot of consolidation of farmers in row crops going into 2026.  More than we’ve seen in years.  In fact, I heard the CEO of a large crop input retailer predict that the number of farmers in Indiana will be ½ of what they are today in 5 years.  As a farmland manager Halderman works hard to ensure our clients have success.  This means working hard to find operators that have a future vision for their operation and the ability to perform to the lease expectations.

Lease competition may decline a little.  Lease rates may also decline.  Lease structures will change and maybe there will be an advantage to sharing more of the risk with the farmer.  Halderman knows farmland leases inside and out, we know the market and what lease structures make the most sense for a farm, for your specific needs and the operator.

Tariffs are certainly providing some challenges.  Challenges present opportunities.  Please reach out to us at 800-424-2324 or www.halderman.com to explore what might be interesting to you.