By Tyne Morgan, Farm Journal
Agricultural economists’ views on the ag economy took a dive in the first Ag Economists’ Monthly Monitor of 2024. Lower commodity prices, along with the outlook for higher costs, continue to weigh on the agriculture industry.
However, ag economists think relatively strong balance sheets and working capital could provide a cushion for 2024 with no major concerns about immediate farm solvency issues.
“We certainly saw the results in the January numbers suggesting a downturn, probably the largest downturn since we’ve started the survey,” says Scott Brown, an agricultural economist with the University of Missouri who also helps author the Ag Economists’ Monthly Monitor.
Brown says from December to the latest survey in January, projections for corn prices fell 25 cents, just one sign that economists are growing more pessimistic at the start of the year.
“I don’t want to make a trend out of just one survey, but if we continue down the path that we started with the January estimates, perhaps we’re telling 2024 to be a less positive story than we would have just a few months ago,” Brown says.
The January survey asked economists to pinpoint the two most important factors driving agriculture’s economic health today, and in the next 12 months. Economists said:
*Declining commodity prices and complicated production costs, including stubbornly high interest rates juxtaposing reduced expenses in certain inputs.
*Commodity production and demand traveling in opposite directions.
*Macroeconomic factors domestically and abroad, as well as geopolitical factors.
In contrast, economists say the most negative aspect regarding the outlook of U.S. agriculture includes:
Competition and expanded production in the global market paint an interesting export picture.
Political stagnation, which could impact biofuel and trade policy.
Compressing margins due to lower prices and higher expenses (including interest rates).
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