The average net farm income for 2017 was $64,000 and University of Illinois Ag Economist Gary Schnitkey expects that number to be much higher when 2018 results are known. In fact, it could be substantially higher.
Schnitkey says there are three reasons why this is happening. Many farmers priced grain before last May when soybean prices were still strong before dropping later in the year. Also, many growers experienced exceptional yields across the state in 2018 and Market Facilitation Program (MFP) payments didn’t hurt either.
“Those really helped,” Schnitkey admits.
Experts like Schnitkey urge operators not to expect higher incomes in 2019. Many believe prices will be lower in the coming year.
“I personally do not expect us to get up to $10.00 (beans). We just have a lot of beans,” said Schnitkey.
Carryout is high this year which suggests lower prices, plus inputs will be higher – especially fertilizer. A dismal scenario in Schnitkey’s opinion includes $3.50 corn and $9.00 soybeans with trend yields.
It appears South America will have good crops and if we have good crops in the U.S. this season, we could even see soybean prices in the lower $8.00 range.
“Do a cash flow with just trend yields and see what it looks like,” suggests Schnitkey.