At its monthly meeting, the Farm Credit Administration board received a report from staff on the profit outlook for the 2016 corn, soybean, and wheat crops.
Based on USDA price forecasts and university estimates of production costs, the profit outlook in 2016 is negative for corn and wheat and is near the break-even point for soybeans. Large supplies are pushing down farm prices for corn and wheat, while soybean prices are expected to be near last year's average because of a less bearish global stock situation.
For the farmer's bottom line, a modest reduction in production costs is offsetting some of the price-depressing effects of record or near-record crop yields. Still, many producers will need to make adjustments during this period by controlling their input costs, selling crops when pricing opportunities arise, and cutting household living expenses.
Farm program payments will supplement 2016 crop returns, particularly for corn and wheat. For crops harvested in 2017, however, government support is scheduled to decline under Agriculture Risk Coverage, the primary farm program for corn, soybeans, and wheat. Payments made under this program are based on revenue guarantees that track the recent downtrend in annual farm prices.
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