Inside the Market

Falling Crop Prices Add to Farm Stress

Todd Hultman
By  Todd Hultman , DTN Lead Analyst
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Falling crop prices, like late 2023 and early 2024's corn and soybeans, can take a financial and mental health toll on growers. (DTN)

Normally, when I write about risk management, I'm talking about financially protecting oneself from the risk of adverse market prices. I don't mention it enough, but risk management should also include a conversation about how to emotionally protect oneself from the stress of volatile prices.

Let's face it: Farming can be a wonderful way of life, but no one should pretend it's easy. Long hours, hard work in extremely hot and cold conditions, broken-down machinery, hailed-out crops, drought, floods, disease, you name it -- if the farming life didn't get you down at times, you wouldn't be human.

All of those things can happen before you go into the house for dinner. Then, you look at your DTN screen and see grain prices down another day. As I write this in early 2024, March corn prices have fallen nine of the past 10 weeks, losing more than 60 cents a bushel. Soybeans have only posted one positive weekly gain in 15 weeks and have lost almost $2 a bushel. Wheat prices slid to their lowest level in over two years. Those downward slides can wear on a person, especially one who's doing most of the work himself.

As rough as markets have been, we humans also tend to make things worse in our own heads. It's easy for us to believe that downward slides will continue, and sometimes they do. On the other hand, just about everyone can tell you a story about the year they sold their crops at the bottom of the market because things looked so bad they didn't think prices would ever get better.

I started as a young commodity broker in 1985, just as ending supplies of U.S. corn were about to climb to 4.0 billion bushels (bb), followed by 4.88 bb in 1986-87. Spot corn fell to the painfully low price of $1.42 in the winter of 1987, and we worried it could take 10 years to work through the big mountains of corn. A drought in 1988 helped ease the surplus, and prices got a big lift in June. In the process, tempers ran high, farms were lost, and lives were changed.

For those who survived high interest rates and 1980s prices, many will tell you the experience had a lasting effect. DTN contributor Philip Shaw mentioned his 1980s experience several times in his "Under the Agridome" column. Ask him today what he thinks crop prices will do, and he'll frankly tell you, "Nobody knows, friend." There's a lot of well-earned wisdom in that answer.

If I could tell young farmers one thing, it would be to spend time thinking ahead about worst-case scenarios and how to protect yourself, not just financially but also emotionally. There will be hard times, but as long as the world needs corn and wheat and rice for over half of its daily calories and biofuels to keep the economy running, we're going to need producers of those crops as well.


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