Assessing a bitter cocktail served up for American farmers – a mix of relatively depressed crop prices, plentiful global grain stockpiles and Brazil’s seemingly limitless ability to expand its soybean ground, industry analyst Mark Soderberg offered a darkly apt summation:

“Pretty sobering.”

“I don’t see the long-term trend changing for the next three to five years,” said Soderberg, senior ag market analyst at ADM Investor Services in Chicago.

“It really boils down to the fact that with big production from Brazil and the U.S., there’s no fear of running out,” Soderberg said, speaking Monday on a panel at Barchart’s Grain Merchandising & Technology Conference in Orlando, Fla.

“There’s always going to be a crop just six months down the road,” Soderberg said. “To me that is why we’re trading at lower prices now than maybe we would have in the past” under similar fundamental metrics, such as stocks-to-use levels.

Soderberg’s fellow panelists – Jeff McPike of Waseda Commodities and Jose Rossato Jr., a director at Coplana, a Sao Paolo-based agricultural producer – voiced similar concerns.

The Barchart conference comes as U.S. farmers ready for a fall harvest that’s likely to bring mixed blessings: bumper yields accompanied by corn and soybean prices not far from four-year lows. Prices that are below break-even for some producers.

U.S. farmer income has dropped sharply from record levels two years ago as record or near-record harvests replenished global grain stockpiles and contributed to a halving of benchmark corn and soybean prices from 2022 peaks. Last week, USDA forecast total crop receipts in 2024 to tumble $27.7 billion, or 10%, from 2023, led by a 22% drop in corn receipts and a 16.7% slide in soybeans. For perspective, estimated 2024 farm income is still 15% above the $121.5 billion inflation-adjusted average for the past 20 years.

A “new normal” for grain prices?

Agriculture is still feeling the aftereffects of the COVID-19 pandemic, Russia’s invasion of Ukraine and other geopolitical shock waves, panelists noted.

McPike said that in the wake of the pandemic, “we’ve gone from ‘just-in-case’ inventory management to a ‘just-in-time” mindset among those buying commodities and other goods.  

“Consumers are being very, very careful about keeping lower inventories because of interest rate costs, because of carry costs,” McPike said. “It’s a recipe for volatility.”

Corn and soybean futures rebounded modestly this month following a protracted slump, but analysts are skeptical about whether extended rallies are sustainable. On Monday, December corn futures settled around $4.07 per bushel, up from a contract low of $3.85 posted Aug. 26. November soybeans ended around $10.18, after sinking as low as $9.55 in mid-August.

Recent prices may represent a “new normal” of sorts – or more precisely, a return to recent historic norms. From mid-2014 through 2019, corn mostly traded between $3.25 and $4, outside of a handful of short-lived rallies above $4, based on nearby futures. Corn futures bottomed just above $3 in April 2020 before topping $8.24 about two years later.

“If you look back to the lower band of historic cash prices the past 10 years or so,” McPike said, today’s prices “shouldn’t be a surprise.”

Prices “were way above where we should have been for quite a while because of the war in Ukraine, the fear of drought here, the fear of drought there,” McPike said. “Now we have to say these prices are probably more ‘normal.’ Corn at $4 is still historically high. I hate to say that because the cost of production has gone up, the costs of inputs have gone up and the cost of interest has gone up.”

Asked what events or forces might come along and lift grain markets out of the doldrums, McPike offered a quick answer: India. With an estimated 1.45 million people, India recently surpassed China as the world’s most populous country. It could soon emerge as an even bigger buyer of agricultural goods.

India “is a growth story,” McPike said. “They’re China 50 years ago.”

Brazil’s farmers also facing squeeze

Brazil has expanded its soybean planted area nearly every year for the past two decades and has potential to continue that pace, Rossato said. USDA recently forecast Brazil’s 2025 soybean harvest at a record 169 million metric tons, up 10.5% from 2024.

About 23% of Brazil, or almost 500 million acres – roughly the equivalent of 10 Nebraskas – is either grassland or pasture, Rossato said. Much of that land could conceivably be converted to crops, Rossato said, but about half of that ground is too poor to become productive farmland any time soon.

Brazil’s farmers aren’t immune from the same market forces buffeting their American counterparts, Rossato said.

Brazil’s soybean plantings are expected to be up 1% to 1.5% for the new crop year, below the roughly 3.5% growth pace of past five years, Rossato said. The expected pullback comes amid signs China may be pulling back on its soybean purchases from Brazil, he said.

“Over the past two decades, we have seen huge demand from Asia, especially from China,” Rossato said. But recently, “China is not buying as much as you’d expect them to buy considering how much prices have dropped.”

“They bought a lot of soybeans the last two, three years, so they may have a good amount in storage,” he said. “Maybe they are concerned about their own economy. We don’t really know.”

Soybeans have dropped close to the break-even point for some farmers in Brazil, Rossato said. That’s a sharp U-turn from high prices a couple years ago that prompted many to borrow money to buy expensive new tractors and combines. Today’s weaker markets may force some farmers out of the business, though he doesn’t think that means the land won’t be farmed.

“We are not seeing soybean area going down,” he said. “Land is just changing hands, changing farmers. The land is still there. Someone will take it. But if we don’t have a weather problem next year, prices stay down and profitability continues to slide, some more will be out of the game.”