US Farm Profits Are Expected To Plummet This Year

The USDA says profits for American farmers will plunge 27% in 2014, to $US95.8 billion in 2014 $US130.5 billion.

It will be the lowest level since 2010, though above the $US8 billion above the previous 10-year average. The reason: The run-up in prices seen in recent years resulting from extreme weather reducing yields and driving up prices has largely ended.

Here’s the chart. Net cash income includes receipts from 2013. It will also decline, 22% to $US101.9 billion. You can see how the period from 2009 to 2012 saw a huge boom in income:

Here’s what we mean, in chart form: corn prices are set to decline 30%, as the USDA predicts 2013 will see production only slightly below records seen in 2014. Everything else but cotton will also see declines.

“Both sales receipts and value of inventory change for corn in 2014 are expected to decline significantly, reflecting a large forecast decline in the average price of corn for grain,” the USDA said. “The world corn market has become much more competitive. Use of corn for ethanol is expected to rise. Hay receipts are expected to increase reflecting increased production, but a decline in the annual price of hay is expected to result in a small decline in hay’s overall value of production in 2014.

In its earnings deck today, Deere projects a similar decline in overall revenue:

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