Lower crop returns will pressure farmland market, say analysts

The boom in corn and soybean prices since 2020 is fading away, with lower farm income likely in the near term, wrote three agricultural economists in the farmdoc daily blog. “Returns to farming have declined, suggesting that cash rents should decline as well. How quickly or how much cash rents decline will depend on how far commodity prices fall as well as potential policy responses to those declines,” they said.

The 2022 corn and soybean crops fetched the second-highest season-average prices ever: $6.54 a bushel for corn and $14.20 a bushel for soybeans. The USDA estimates that this year’s crops will sell for an average of $4.40 a bushel for corn and $11.20 a bushel for soybeans. Futures markets indicate slightly lower average prices for the 2025 crop.

“Recent price patterns suggest that 2021 through 2023 was a transitory period of higher prices, and now we may be returning to a period of lower prices,” wrote Carl Zulauf of Ohio State University and Gary Schnitkey and Nick Paulson of the University of Illinois. “As such, suggested responses to price downturns are well known, and include thoughtful use of financial reserves.”

High farm incomes from 2020 to 2023 put most farms in solid financial position to weather a period of lower prices, said the economists. Younger farmers would face the most stress.