A fall harvest outlook does not provide farmers with a great deal of hope that prices will improve anytime soon. Steve Nicholson, Global Sector Strategist for Grains and Oilseeds with Rabobank, says their latest report indicates prices are currently in the bottom of a cycle.

“Farmers have said no more capital expenditures machinery. They’ve tried to mine the nutrients out of soil to reduce fertilizer costs. You know, probably been a little more selective on their spraying for herbicides. And now it’s, can we get cash rents down a little bit. So you’re in the bottom of that trough of where there could be, we could be here for a little while longer, maybe a couple years.”

Nicholson says there’s a variety of factors working against agriculture at the moment.

“When you look at farm machinery, it was high priced to start off with. But the fact is, now they have to deal with a 50% tariff on aluminum and steel coming in, let alone what other things are bringing in the United States to manufacture the machinery you use. So you know that’s not going down in price. And then you have the whole chemistry. And you look at fertilizers, you know, chemistry, we rely on China for a lot of the active ingredients, and so that, obviously, that’s gotten tinged with the tariff as well.”

And he says policy issues are also at play.

“We’ve seen COVID payments. We’ve seen MFP payments back in the first Trump years. And now we’re, you know, kind of maybe on the verge of that again. We’ve seen the ECap payments of last year. And so we have these ad hoc programs that are coming into agriculture, and what that’s doing is that these high support payments are kind of adding to the inflation of everything agriculture.”