The Harsh Realities Faced by US Farmers in 2024
The Farmer’s Regret
Illinois farmer Dan Henebry regrets not selling more of his corn crop last summer, when the Midwest needed rain and prices were high. He is not alone.
Unexpected Turn of Events
Farmers across the United States are kicking themselves for putting off corn sales after fields dried up in May and June, fueling expectations for higher prices and smaller harvests. Instead, prices tanked as rains saved the crop. The size and speed of the price collapse stung farmers and left their storage bins stuffed with record amounts of corn.
Market Downturn and Its Impact
The steepest market downturn in a decade in 2023 has extended into 2024, hurting the U.S. rural economy. Two years of high prices and tight crop supplies spurred by unfavorable global weather and disruption from the Ukraine war have been quickly reversed.
Record-Large Harvests and Their Consequences
Record-large harvests in the United States and Brazil, increased competition for U.S. grain exports, and limited domestic demand led to hefty amounts of corn locked away in storage, pushing U.S. corn prices to their lowest level since November 2020 on Wednesday.
The “Store and Ignore” Strategy
Ten farmers, economists, and market analysts said U.S. growers miscalculated when they held on to corn rather than booking sales. The “store and ignore” strategy of waiting for higher prices has not paid off, leaving some farmers cutting back purchases of pricey equipment and planting less corn.
Unforeseen Price Tumble
Corn futures prices that approached $6.30 a bushel in June have since tumbled to $4.10, after U.S. farmers ultimately produced record crop yields.
Regrets and Reflections
“I wish I sold a lot more,” Henebry said. U.S. growers held a whopping 7.83 billion bushels of corn in storage bins on their farms as of Dec. 1, the most ever for that date and up 16% from a nine-year low in December 2022, U.S. government data show.
The Impact of Storage Costs
Henebry said he still has about 40% of his 2023 harvest in storage, including 30,000 bushels on his farm in central Illinois. He is paying 3 to 4 cents per bushel a month to keep another 30,000 bushels at a local grain elevator. In a normal year, he would not have any still stored there, he said.
The Dilemma of Selling
Before prices plunged last summer, Henebry said he sold some corn for $5.50 to $5.70 per bushel and then for as much as $6.21 per bushel delivered to the grain elevator. He held off on further sales because he was counting on poor weather to reduce production and boost prices.
Challenges Ahead
Prices will come under renewed pressure as farmers do sell the grain they have in storage, analysts said. “Any sort of little rally, there’s going to be a lot of corn sold,” said Henebry.
Financial Implications
Fred Huddlestun, a farmer in Yale, Illinois, said he still had his entire 2023 corn harvest in storage last month: about 39,000 bushels at an elevator and 25,000 bushels at home.
The Economic Impact
Such expected losses are rippling through rural America. Net farm income in 2024 is projected to suffer the largest year-to-year dollar decrease in history, the American Farm Bureau Federation, an industry group, said in a report this month.
The Way Forward
Early forecasts show U.S. farmers are likely to cut back on corn planting and favor soybeans in 2024. They may struggle to turn a profit with either crop.
Adapting to Change
Glenn Brunkow, a fifth-generation crop and livestock farmer, plans to delay upgrades to machinery and may try to repair equipment himself, rather than paying a dealership.
Future Challenges
Analysts do not expect a major bump in demand to draw down corn stockpiles. U.S. exports of agricultural and related products fell 10% by value in 2023 to a three-year low, as plentiful supplies from Brazil and elsewhere challenged U.S. export sales.
