US Corn Crop Size Pushes Chicago Prices to Four-Year Low Amidst Severe Farm Income Decline

Record High Corn Yield Predicted

On Monday, corn prices in Chicago fell to a four-year low due to a pessimistic crop yield forecast predicting record highs for the US by the end of the harvest season. This is good news for consumers, but it is a continuation of the ongoing disaster for farmers. Their incomes are anticipated to fall sharply this year due to decreasing agricultural prices and increasing costs.

The Pro Farmer Crop Tour has projected a record corn yield of 181 bushels per acre on average across the country. If this prediction comes true, it will be a new record. The forecast also predicts a production of around 15 million bushels, which aligns with the USDA's estimates.

Experts Opinions on Corn Prices

Adam Davis, the Chief Investment Officer at Farrer Capital, informed Bloomberg that corn prices could be close to reaching a bottom, with most negative factors already taken into account. He mentioned that it's probable that US farmers might hold onto supplies to increase prices, adding that Pro Farmer simply confirmed what was already known.

At the end of last week, Brian Grete, the leader of the eastern leg of the Pro Farmer Crop Tour, which completed the four-day crop survey, told Bloomberg, "There are big yields out there, both corn and beans."

Challenges for American Farmers

Interestingly, many American farmers are not rejoicing over the bumper crops. The large harvests are causing numerous problems, as the abundant inventories have pushed soybean and corn futures to their lowest levels since 2020 last week, as Bloomberg reported.

Recently, corn futures on the Chicago Board of Trade fell below $4 a bushel, approaching the lows of early 2020. Prices have been halved since reaching a peak of about $8 in April 2022. Money managers have increased their bearish bets on the grain to the highest level in three weeks.

Other grains, such as soybeans and wheat, have also seen their prices fall due to the predictions of large harvests.

Farm Incomes Expected to Crash

Earlier this year, the USDA warned that projected farm incomes were expected to plummet by 26% this year, the largest decrease since 2006. With small farms collapsing, Robert F. Kennedy Jr. announced last week that his support for former President Trump would include efforts to make America's small farms great again.

Bottom Line

The predicted record high corn yields in the US are pushing prices to a four-year low, which is a double-edged sword. While consumers may benefit from lower prices, the situation is causing severe financial stress for farmers, whose incomes are expected to plummet. The situation raises questions about the sustainability of current agricultural practices and the future of small farms. What are your thoughts on this issue? Share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.