Crop farmers waiting for stronger returns might have a longer road ahead than many hoped. According to Farm Journal’s June Ag Economists’ Monthly Monitor(AEEM), half of the agricultural economists surveyed don’t expect crop agriculture to return to broadly profitable margins for another three to five years. The results highlight growing concerns over tight margins, shrinking working capital and continued uncertainty surrounding demand and production costs.
Farm Journal regularly reaches out to a vetted list of 80 ag economists from across the industry through the Ag Economists Monthly Monitor. Of the 17 economists who responded to the May survey, only 19% of economists believe crop profitability will broadly return within the next 12 months, while 31% expect that recovery to take one to two years. No respondents said the industry has already returned to sustainable profitability, reflecting the financial pressure many producers continue to face despite another year of strong crop production potential.
But the reality is without direct government farm program payments, which are forecast to total $44.3 billion for the current year, and represents a roughly $13.8 billion increase from the previous year, the ag economic picture would look even worse.
“U.S. farm income is more than ever tied to ad hoc payments or similar subsidies as for biofuels and crop insurance,” said one economist.
Biggest Takeaways from the June Monthly Monitor
- 50% of economists who responded expect crop agriculture won’t return to broadly profitable margins for 3 to 5 years.
- Commodity prices below breakeven remain the top concern across much of crop agriculture.
- Input costs, debt and declining working capital continue to pressure farm balance sheets.
- Weather, Chinese demand and trade were cited as the biggest wild cards over the next 12 months.
- 60% believe farmers planted about the right number of corn and soybean acres this year.
- 44% say fewer corn acres would have been the most supportive outcome for grain prices.
Mixed View on Economic Conditions
Economists paint a mixed but still cautious picture of the current ag economy. Compared to one month ago, a majority say conditions are either unchanged (52.94%) or somewhat better off (23.53%), with none of the economists who responded reporting a significant decline.
The longer-term view remains more negative. When compared to a year ago, 62.5% of economists who responded say the ag economy is somewhat worse off, which was a glaring statistic in the latest survey, while just 12.5% say it is somewhat better off. Still, sentiment improves looking ahead, as nearly half expect conditions to be somewhat better in the next 12 months and another 35.29% anticipate a much better ag economy, signaling cautious optimism despite ongoing margin pressure.
When asked to list the top factors driving ag economic health, economists said:
- Input costs and commodity prices below breakeven remain the dominant concern
- U.S. and global crop production, especially corn and soybeans
- Weather patterns and yield potential this summer
- Export demand, especially Chinese import activity
- Trade policy, geopolitical risk, and global market uncertainty
- Energy and fertilizer markets influencing both costs and demand
- Rising debt levels and declining working capital across farms
Margins Still Driving the Conversation
When asked what will have the biggest impact on agriculture’s economic health over the next year, economists overwhelmingly pointed to profitability. Many said the combination of weak commodity prices and elevated production costs continues to leave producers operating below breakeven.
“We still need to get to a point where prices are covering cost of production,” one economist wrote. Another respondent added that “breakeven costs remain above market prices for most commodities,” while another described crop input prices as “unsustainably unaffordable.”
Even though fertilizer and fuel prices have moderated from recent highs, economists say many farms are still feeling the effects of several difficult years. One respondent noted that working capital has declined “for most farms, even the most profitable,” while another pointed to debt accumulated over recent seasons that continues to weigh on balance sheets.
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Supply Shocks Would Speed the Recovery
While economists see profitability remaining elusive for several years, University of Missouri agricultural economist Ben Brown says the fastest path back to stronger margins would likely come from a supply-driven event rather than a demand surge.
“Because agricultural commodity prices are relatively inelastic, production reductions—whether from lower acreage or lower yields—have increased prices more than the reduction in production,” Brown says. He adds that when coupled with the farm safety net for row crop producers, a weather-related production shortfall would likely provide the quickest return to profitability in the short term.
Carl Zulauf, Professor Emeritus in the Department of Agricultural, Environmental, and Development Economics at The Ohio State University, agrees, saying this is especially the case if the supply shocks come outside the US.
“Contrary to the prevailing story in the market and media, stocks are not burdensome by any measure that I would use. They are adequate at best,” adds Zulauf. “A supply shock in one or more major production regions could send prices notably higher. I would also go one step further than Ben, I think we are building a demand lead market. But, yield trumps everything. If we have high production in the northern hemisphere, price will remain muted to low.”
Brown notes demand for feed grains remains solid despite disappointing prices.
“We continue to grow more global supplies of feed grains, justifying a need to continue increasing demand, but this is a period where we have growing demand with relatively muted prices because of available supplies,” he explains.
Brown also points out that total farm income may paint a different picture than cash market returns alone. Brown says when cash receipts are combined with Farmer Bridge Assistance payments, crop insurance indemnities and potentially larger ARC/PLC payments, some producers could see a return to profitability during the 2025-26 marketing year. Additional congressional assistance, if approved, could further improve the outlook.
But other economists point to biofuels as an important factor to watch when it comes to the ag economy.
“Biofuels use creates the conditions for higher prices (though ample supplies and good weather mean prices don’t have to rally). But specific biofuels price impacts always depend on policy implementation details. It looks like we need a lot of bio-based diesel to meet the new RVOs but the industry does not simply buy beans to comply, they consider all potential avenues.” said one economist.
“I think the biofuels policy on oilseed is a big deal,” says Zulauf. “It is not clear how it will work out since so many sources are available, but the potential expansion in demand is large as Scott Irwin has been pointing out recently. It is something to watch. I also think exports need to be watched, especially for corn. They have been quite strong this year and appear to be maintaining a nice pace.”
Production Isn’t Contracting, Yet
Despite persistent margin pressure, Brown doesn’t believe financial stress has reached the point where it’s reducing U.S. crop production capacity.
“I do not think we have reached the point of financial pressures causing production contraction in the U.S.,” Brown says. Instead, he says farmland leaving one operation because of retirement, downsizing or even bankruptcy is typically being absorbed by another producer, keeping those acres in production.
Brown believes the biggest long-term threats to production capacity are not financial. Instead, he points to urban development, solar projects and data centers permanently converting farmland to other uses.
Zulauf says margins may be tight, but it hasn’t created a tipping point yet, especially when you consider the cushion from government payments.
“Current input prices are not high when you factor in government payments. You cannot give the kind of payments we have given farmers over the last 10 years and not expect input prices to increase. Farmers want to farm and will spend the money on the farm,” Zulauf says.
Weather and Demand Could Shift the Outlook
Outside of margins, economists identified weather as one of the biggest variables that could change the farm economy over the next year. Respondents pointed to U.S. crop yields, global production and developing El Niño weather patterns as key drivers of grain prices.
Trade and export demand also ranked high on the list. One economist identified “yields this summer and Chinese import demand” as the two biggest factors to watch, while another wrote, “Although it is a bit like putting Humpty Dumpty back together, we need a deal with China.”
Brown agrees export demand remains a major wildcard, particularly if future trade negotiations include agricultural purchase commitments.
“If gaining access to the U.S. consumer market is contingent on China buying $15 billion of U.S. corn, that seems like a tradeoff China would make,” Brown says. “A purchase commitment of that size would increase prices for U.S. corn producers relatively quickly.”
Still, Brown cautions there’s little evidence China currently needs large corn imports, making those commitments difficult to factor into marketing plans. Instead, he encourages producers to maintain flexibility through risk management strategies, including options, that preserve upside potential while limiting downside risk.
Are Farmers Becoming Less Responsive to Price?
Ahead of USDA’s June Acreage report, economists were asked which outcome would have been most supportive for grain prices. Forty-four percent selected fewer corn acres, while 19% favored fewer soybean acres and another 19% said more prevented planting would have provided the biggest boost.
Despite today’s tight margins, most economists don’t believe producers overplanted this spring. Sixty percent said the 180 million combined corn and soybean acres planted in 2026 were “about right,” while 40% felt farmers planted somewhat too many acres.
Brown says agriculture as a whole appears to be becoming less responsive to traditional price signals.
“As a sector, we are becoming less responsive to price signals,” Brown says. He points to cattle producers who have been slow to rebuild herds despite improved returns, as well as crop farmers who have largely maintained acreage despite tighter margins. However, he notes there are exceptions, including Illinois producers shifting some corn acres to soybeans and Arkansas farmers reducing rice acres in favor of soybeans as relative returns change.
“Ssupply responses take time,” says Zulauf. “They happen but fixed assets and management momentum dampen them.”
Watching Farm Finances More Than Markets
While grain prices remain important, many economists who responded this month say they are paying even closer attention to farm balance sheets. Loan delinquencies, operating debt and working capital were among the most frequently cited indicators for measuring the health of the ag economy.
Others warned that strong farmland values may be masking financial stress. “Farm debt-to-asset ratios are key, but farmers are inherently asset rich and thus changes are often masked,” one economist wrote. Another cautioned that if producers struggle to repay operating loans, it could eventually lead to less lending and more financial stress across agriculture.
Most closely watched indicators include:
- Corn prices and overall commodity price direction
- Input costs, especially fertilizer, fuel and inflation trends
- Chinese import demand and broader export activity
- Land values and farm balance sheet strength
- Loan delinquencies and 30–90 day past-due farm loans
- Farm debt-to-asset ratios and working capital trends
- Biofuel demand and implications of Renewable Volume Obligations (RVOs)
- U.S. corn production and acreage outlook
- Consumer spending and broader economic health
Beyond market pricing, several economists stress that policy and demand-side variables are becoming more influential, particularly biofuels policy and trade agreements. One respondent noted that biofuel demand continues to shape both crop and livestock markets, while another pointed to the importance of long-term corn demand and its ripple effects on fertilizer, feed and global acreage decisions.
Others caution that traditional indicators can lag real conditions in agriculture, with one economist noting that real-time input costs like fertilizer and fuel often provide a more immediate read on farm profitability than broader national data. At the same time, rising short-term debt and repayment pressures are emerging as early warning signs that lenders and economists are watching closely heading into the next year.
Fundamentals Still Matter
Although geopolitical events have created significant volatility in recent years, Brown believes supply and demand fundamentals continue to drive agricultural markets.
“I believe commodity prices are being driven by supply and demand fundamentals,” Brown says, adding that risk premiums tied to the Black Sea region and the Middle East have become secondary influences. He acknowledges geopolitical shocks can temporarily disrupt markets—as happened following Russia’s invasion of Ukraine, when cash and futures wheat markets became disconnected—but says those disruptions have largely been resolved.
Instead, Brown believes unexpected international purchase commitments remain the biggest challenge for marketers because they are nearly impossible to predict. That uncertainty, he says, reinforces the importance of building flexibility into farm marketing plans.
“I think the often referred to ‘headline risks’ have introduced uncertainty into the market that clearly has affected prices short term. However, I do not see where the markets have separated from supply and demand in the intermediate and longer term,” says Zulauf. “My my feeling is that we have seen an uptick in option premiums relative to the same futures price. Ben, is my feeling right or wrong? If my feeling is right, this suggests the market is pricing more uncertainty. Moreover, again if I am right, increasing option premiums make it more expensive for them to be used as a marketing tool.”
Looking Ahead
Farm Journal’s June Ag Economists’ Monthly Monitor shows economists still see margins as the defining issue for agriculture over the next 12 months, with input costs and commodity prices below breakeven leading the list of concerns. Many also point to weather and crop production in the U.S. and globally as key swing factors that could quickly alter supply and price direction, particularly for corn and soybeans.
Demand-side uncertainty remains just as important, with export sales and Chinese import demand frequently cited alongside broader trade and geopolitical risks. Respondents also highlight ongoing pressure from elevated input inflation, volatile energy and fertilizer markets, and tightening balance sheets as working capital declines and debt loads continue to build.
