Fundamentally Speaking

Last week, Congress passed a bill late that not only prevented a shutdown of the federal government, it also continued to extend the 2018 Farm Bill through Sept. 30, 2025.

The bill also provides $20.78 billion to help farmers with disaster losses during the past two years and also includes $10 billion in emergency aid to ag producers.

The high cost of supplies, low commodity prices and exceptionally high interest rates were some of the reasons cited why this assistance was necessary.

With regards to low commodity prices, this is certainly the case for the grain and oilseeds complex.

This chart shows the annual percent change for corn, soybean and Chicago wheat futures on the left-hand axis while the two-year percent change is plotted on the right-hand axis.

A generally good growing season for the major crops here in the U.S. along with decent overseas production, especially from South America, weighed on crop prices despite a relatively stout demand situation.

This has resulted in the prices of corn, soybeans, its products soybean meal and soybean oil, along with the three classes of wheat traded in Chicago, Kansas City and Minneapolis all ending the year lower for the second time in a row, the first time that has happened since the 2014 and 2015 calendar years.

The spot contract has corn down 28% vs. the prior year's 30.6% tumble as the two-year decline is off 32.5% which is the largest drop since the combined 2014 and 2015 calendar years.

Spot soybeans were down 22.9%, the largest percent drop since 2008 and follows up on a 14.8% decline in 2023. Note the $2.96 fall is the largest ever in dollar per bushel terms.

Therefore, the two-year decline is down 34.3%, which is the largest drop for two consecutive calendar years at least since 2000, and both the one- and two-year falls could have been larger were in not for a 46-year-end rally in soybeans the last two weeks of the year.

Spot Chicago wheat was down 20.3%, following a 20.7% decline in 2023.

Therefore, the two-year decline is down 30.4%, which is the largest drop for two consecutive calendar years, at least since 2015 and 2016.

As for the soy products, spot soybean meal was down 20.3% this year which is the largest annual decline since 2015 even with a late two-week rally of $28 per ton, while spot bean oil was down 17.8%, KC wheat down 12.9% for 2024, and Minneapolis wheat down 17.7%.

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