The last six years have been extraordinarily bountiful and profitable for U.S. row crop farmers. This upward trend in prices and profit margins, however, is expected to take a dramatic downward shift due to the waning demand from China and the ethanol industry for altered corn and soybean production.
Limited growth from ethanol, and the resulting losses on row crops, may compel some U.S. row crop farmers to revert acreage back to pasture and forage crops.
To counter an anticipated era of lower costs and profitability, row crop farmers – especially the younger farming generations and large row crop operations – are encouraged to prepare by putting cash in the bank. To manage risk, deal with the hard times ahead, and avoid bankruptcy in the upcoming 6 years, cash is recommended as the ultimate solution.
Though ethanol’s demand for corn has flat-lined, there still remains promise for U.S. corn and other commodities:
- Corn: More corn will be added back into feed rations, causing exports to increase.
- Soybeans: Exports are still very strong from China, Africa and the rest of the developing world.
- Wheat: Recently, the United States has been using more wheat than it’s produced, which has greatly benefited wheat stocks.
- Cotton: The U.S. cotton sector is anticipating a boom, as supplies are at a 29-year low.
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