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What’s going on in agriculture? What is top of mind for farmers? I bet you have heard those questions a lot across social media and news sites. However, don’t you think those questions are extremely broad? Agriculture is such a diverse industry in the United States and what is “going on” and what is “top of mind” can vary greatly from one region of the country to another. Here in this newsletter, ARM is going to bring you details from our boots on the ground crew across our footprint. This information is not meant to be fancy, negative or positive, bullish or bearish, and especially not formal. It is meant to be informative and real. Each newsletter will feature several states within our footprint.

Hot Button Issues

What phrase did the pandemic make most famous? Guesses? The answer is “unprecedented times.” The explanation for everything was “we are in unprecedented times.” Seems like everything as of late revolves around that common theme: Net Farm Income

  • Via USDA’s projection NFI will drop 25.5% from 2023 to 2024, which coupled with the prior year drop from 2022 to 2023 of 16% would equate to the largest drop in history.
  • Many farmers have already burnt through the working capital that was built in the years leading up to this steep decline. Working capital is a farm’s first line of defense against volatility and some are already in negative WC positions. So, how can you rebuild your line and defend against current and coming volatility?
    • Think about these items – dispose of lazy assets, cash out equity from long term assets if necessary, take a deep dive into your debt service and borrowing needs for 2025.

Quick Commodity Price Chat

Speaking of the NFI drop, commodity prices are tough.

Prices have continued to dip with the corn market having a 3 on the front of cash as well as December futures. The annual crop tour is under way with big yields coming out of Iowa. Corn Bulls Slip On Thursday (barchart.com)

From the boots on the ground here at ARM the consensus across many markets is the amount of 24 corn crop already marketed is lower than normal. Many are hoping for a bounce to make sales, but the market appears oversold which could produce a short-lived bounce.

This is a time to keep a laser focus on the markets and take any opportunity the market gives to lock in profitability.

From the Boots on the Ground at ARM

Let’s get started in the South.

Shall we start with the states that is always on my mind? Georgia. Did you know GA is not #1 for peach production? Poultry is actually Georgia’s number one commodity. The weather has been dramatic in GA, like wearing a ball gown to the Dollar General dramatic. The state had about 5 weeks of extremely dry weather from May-July. There have been some prevent plant claims, and some dry land corn claims due to the dryness. Then the rain came, and it was a build the ark type rain. Most crops were not impacted by the heavy rains, and most fall crops look healthy for the most part. Corn harvest has started, and yields are on par with prior years for irrigated, dry land is not as fortunate with many filing crop insurance claims.

Keeping it in the South, let’s chat about Mississippi. Much of the northern part of the state is abnormally dry via the drought monitor. Most farmers that do not have irrigation are having a hard time preventing the crop from burning slap up. Even some of those with irrigation are not having the easiest of times either. The drought has caused farmers to start irrigating more frequently and earlier. The rising costs of fuel and parts really hit hard in the Delta this year with the increased usage of irrigation. Wildlife has also played a role in increased costs by interfering with irrigation systems and destroying crops. Market prices are also on the decline. Farmers are worried they may not be able to cash flow without a bumper crop at these current prices.

Now to the North.

Moving right along to the Queen of Corn herself, Iowa. It was a wet Spring and planting happened later than normal. There were small amounts of late planting and prevented planting, which is not typical for Iowa. Some areas have been impacted by flooding, but crop damage is isolated to small areas. The overall crop condition is above average. Despite the number of crops planted later than normal, corn silking is slightly ahead of the 5-year average (long live the Queen of corn), and soybeans are setting pods slightly behind average but catching up quickly. The summer months have provided adequate heat and timely rain. There are some early rumblings of fall fertilizer pre-pay opening up soon, and everyone is hoping input prices will soften. Ethanol plants and feed mills are paying a positive basis in many areas for 2023 crop, but new crop prices are not near as rosy.

Last state in the boots on the ground roundup this newsletter is Nebraska. Crops are in excellent condition across the state with above average yield potential. There was some hail and wind damage in areas, not enough to impact overall state production. Timely rains have been beneficial; however, irrigation has started in all areas. Wheat yields have been stellar with dryland as high as 80 bushels and irrigated over 100 bushels. Producers are concerned with prices as most have not priced ahead and are facing challenging with cash flow.