Despite forecasts of larger farm net incomes, the debt-to-asset ratios on farms are up. While farm income of $179.5 billion is predicted, a full 40% of that total will come from cattle and government payments to farmers. U.S. farmers and livestock producers will spend $467.4 billion on production expenses, up 2.6% from last year.
Climate issues including rising temperatures, erratic rainfall, and weather extremes challenge profits. Input costs for feed, diesel fuel, seed, machinery, and wages continue to move up. Politics including trade and tariff issues create price fluctuation. China has not imported U.S. soybeans, turning to Brazil for their soy needs.
Hopes that China will return as a major buyer soon were diminished on Wednesday as Xi Jinping displayed advanced Chinese nuclear weapons and boasted close relationship with Russia as thousands of troops marched past Tiananmen Square.
The competitive attitude against the U.S. was exacerbated by lack of presence of U.S. western allies at the celebration which highlighted China’s suffering and contributions against Japan in WWII.
While 2% fewer acres of corn are planted than in 1924, 729% more corn is grown on the land today. However, corn world exports from the U.S.are down to 33% from a high of 59% in 2004. All of these issues leave 52 to 82% of small farm families with profit margin risks.
Fully 51% of farm households report negative income as 24% received government payments. Larger farms fare better than small family farms due to better production efficiency.
Wood Price Not Tree-mendous
September lumber prices have hit a low for the year. U.S. speculative inventory has accumulated while demand has been low. Framing lumber prices are down 3.7% since late August.
The U.S. Department of Commerce doubled the duty rate on Canadian softwood in August to arrive at a 35.2% total tariff rate. One of the largest forest product companies, Interfor, reduced production by 145 million board feet through December of 2025, a 12% output drop.
The announcement did lead to a brief rise in prices even as monthly prices are down by more than 29%. Weak markets and economic uncertainty have driven price crashes. Meanwhile China imports are down due to trade disputes.
Price volatility and ongoing trade issues are expected to continue.