Commodity prices are forecast to fall in 2024 but so will crop production expenses, said agricultural economist Michael Langemeier at Purdue University.
“Moderation in input prices, particularly fertilizer prices, is likely to result in lower breakeven prices in 2024.”
Farm production expenses were forecast by the United States Department of Agriculture (USDA) at a record $458 billion this year, up nearly 7 percent from 2022, when expenses surged by 15 percent.
Fertilizer and fuel costs soared in 2022 and were a sore point in farm country. Fuel prices would decline, and fertilizer prices would hold steady this year, according to an August USDA estimate.
To offset high production costs, farm groups have called for higher reference prices, which would make crop subsidy payments more likely in the new farm bill.
A 10 percent increase in reference prices could boost crop subsidies by $20 billion, according to one analyst.
Lawmakers have not agreed on how to offset the expense and stay within spending limits. The farm bill is on the legislative back burner while Congress works on government funding bills.
“Breakeven prices for corn and soybeans are expected to decline from 5 to 10 percent in 2024 after increasing sharply in 2022 and 2023,” Langemeier said,
Fertilizer, diesel fuel, and ag chemical prices have fallen steeply in the past year, nearly 50 percent for anhydrous ammonia, a nitrogen fertilizer.
“Despite the large decreases in the past 12 months, fertilizer prices are still well above what they were in 2020,” said Langemeier.
“The 2023 price for anhydrous ammonia is still 20 percent higher than it was in 2020. Input price increases for supplies and repairs, machinery, and wages were 2.5 percent.”
Over the long term, farm input prices tend to track the U.S. inflation rate, more so for machinery and labor than for feed, seed, fertilizer, and fuels, said Langemeier.
Although costs are expected to be lower in 2024, corn and soybean growers would still face breakeven prices of more than $5 a bushel for corn and $12 a bushel for soybeans, said a team of Midwestern agricultural economists.
Growers were more likely to make money with soybeans than corn, they said in estimating expenses and revenue from 2024 crops.
“Reductions in fertilizer prices are the main factor in the non-land cost decline,” the economists said.
“No other costs are projected to decline.”