Ask a farmer what their profit levels from crop farming were in 2024, and many of the answers in the Upper Midwest will likely be something like “worse than anticipated” to “disappointing” to “right down terrible”. Any of those answers could be correct, depending on where the farmer is located and how the heavy rains early in the growing season and the dry weather later in the growing season affected crop production in the area. The other big factor in farm profitability in 2024 was where farmers were positioned in the grain markets during the year, as well as the type and level of crop insurance coverage that was in place on the 2024 crop. Following is a brief overview of how some of these major factors will likely affect final farm profitability in 2024:
• 2024 CROP YIELDS - “Mother nature” was not kind to producers in the areas of the Upper Midwest that were heavily impacted by the excessive rainfall from late May until early July. Portions of Sothern Minnesota and extreme Northern Iowa were especially hard hit. In some cases, the same areas of southern Minnesota and northwest Iowa that had near-record rainfall during June also experienced near-record dryness from mid-August until early October. This impacted final yields for both corn and soybeans in numerous areas. One piece of good news for producers regarding the 2024 corn harvest was the harvest moisture of the corn coming out of the field, which was a cost saving for many farmers. Most of the corn harvested this Fall was under 18 percent moisture, which meant that a large portion of the corn crop could go directly in the bin for storage, without the need for additional drying.
Generally, the reported corn and soybean yields in most areas of the Upper Midwest were highly variable, mainly due to excessive rainfall in some locations early in the growing season and limited rainfall late in the growing season in portions of the region. The 2024 corn and soybean yields in large segments of southern and western Minnesota were not nearly as consistent as the past few years. Corn and soybean yields in 2024 were better and more consistent in much of Iowa, Illinois, Indiana, and other areas of the Eastern Corn Belt that benefitted from more favorable growing conditions.
Differing corn yields in many portions of the Upper Midwest were dependent on corn hybrid selection, planting dates, amount of tile drainage, and the level of excessive rainfall early the growing season. There were some “whole field” corn yield reports of 200 bushels per acre or higher in southern Minnesota and northern Iowa; however, there were also yield reports below 100 bushels per acre at some locations in south central and southwest Minnesota. Overall, many farmers in that region had final 2024 corn yields that were 10-20 percent or more below their crop insurance APH (average) yields.
• GRAIN MARKETING DECISIONS - The “new crop” 2024 corn prices in the upper Midwest did not offer many marketing opportunities, with very little movement during the year. The 2024 “new crop” corn prices in Southern Minnesota started the year near $4.50 per bushel and spent much the first six months between $4.20 and $4.40 per bushel, before dipping below $4.00 per bushel by harvest time. Many crop producers likely had breakeven costs of $5.00-$5.50 per bushel for 2024 at average corn yields on cash rented land. As a result, most farmers were not able to “lock-in” a forward price at a profitable level on their 2024 corn crop. They are now hoping for some post-harvest rallies in the corn market in early 2025. Due to higher interest rates than in recent years, storing grain in 2024-25 is more costly than a few years ago. USDA is currently estimating an average “on-farm” corn price of $4.10 per bushel for the 2024-25 marketing year, which ends on August 31, 2025.
The 2024 “new crop” soybean price in the region started the year near $11.50 per bushel, before dropping throughout the year and ending the year near $9.50 per bushel, with even lower prices at some locations. Following some favorable pricing opportunities for the 2024 soybean crop early in the year, market prices remained below the cost of production for most producers during the second half of 2024. The 2024 cost of production for soybeans on cash rented land is likely near $10.50 to $11.00 per bushel at average yields for many producers. Farmers that took advantage of soybean pricing opportunities early in the year were much more likely to show a small profit for 2024. USDA is currently estimating an average “on-farm” soybean price of $10.80 per bushel for the 2024-25 marketing year; however, prices in the past several weeks have trailed that level.
• 2024 CROP INSURANCE COVERAGE - The crop insurance harvest prices for corn and soybeans were well below the Spring base price levels. The base price is used to determine crop insurance guarantee per acre, while the harvest price is used to determine the harvest value. The lower harvest prices meant that farmers with 85 percent or higher insurance coverage on corn could start collecting 2024 crop insurance indemnity payments at yield levels slightly their average (APH) farm yields for corn and very near APH yields for soybeans. The level and type of crop insurance coverage that a producer carried for the 2024 crop year will impact farm profitability, especially in the areas that had greatly reduced crop yields for the year.
Corn and soybean producers had the option of selecting revenue protection (RP) crop insurance policies ranging from 60% to 95% coverage levels, which can result in some producers receiving large crop insurance indemnity payments others receiving very little or no indemnity payments at the same APH yield and final yields. The 2024 final harvest price for corn was $4.16 per bushel, compared to the Spring base price of $4.66 per bushel. If two farmers both had a 200 bushel per acre APH yield and a 170 bushel per acre actual 2024 corn yield, a farmer with an 85% RP policy would receive an indemnity payment of approximately $85 per acre, while a farmer with a 75% RP policy would receive no indemnity payment.
Corn and soybean producers also had the option of utilizing “enterprise units” or “optional units” for their 2024 crop insurance coverage. Enterprise units usually have a lower premium cost for the same coverage level and combine all acres of a crop in a given county into one crop insurance unit. By comparison, optional units allow producers to insure crops separately in each township section, which can be a big advantage in a year with variable yields, such as 2024. Some farm operators also had buy-up crop insurance coverage for 2024, which may have been beneficial in various locations this past year.
BOTTOM LINE
Corn and soybean producers with average yields could still have a negative profit year in 2024, depending on their level of crop expenses and their grain marketing decisions. Producers with below average to very low crop yields in 2024 will likely have reduced to disastrous profit levels for the year, depending on their crop insurance coverage and grain marketing decisions. Farm operators that are facing serious year-end cash flow shortages are encouraged to consult their farm management advisors and ag lenders sooner than later to look at ways to address the situation. Farmers that will receive large crop insurance indemnity payments for the 2024 crop year should be aware of tax implications and potential audits related to those payments. Many crop producers are now waiting to see if Congress passes a disaster and financial assistance bill that provides some financial relief to offset the losses in 2024.
Note - For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Phone - (507) 381-7960; E-mail - [email protected]
 
 
 
 

Many farm families may be facing a deadline that they are not even aware of. It is estimated that approximately 230,000 farms are required to file “Benefit Ownership Information (BOI) with the U.S. Department of the Treasury, as part of the Corporate Transparency Act (CTA) that was passed by Congress in 2021. The CTA act was passed to combat money laundering and illegal funding by organized crime. Farmers with certain types of business structures are required to file a BOI by January 1, 2025. Failure to comply with this requirement could result in significant fines and even jail time. As of late October, it was estimated that less than 15 percent of the farm operations that are required to complete a BOI had done so.
 
The Corporate Transparency Act requires any business, including certain types of farm business structures, to list any “beneficial owner” in a company with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The BOI filing requirement now applies to all small businesses of all sizes that have filed an incorporating document with their State government, including S-corporations, limited liability corporations (LLC’s), and partnerships. The new BOI requirement will now include many family farm operations that utilize these type of business structures. A “beneficial owner” includes anyone with significant stake in the company or farm’s business and management, which can include having shares, equity, or having a significant role in management decisions.
 
Based on the 2022 U.S. Census of Agriculture, 85 percent of all farms in the U.S. are operated as “sole proprietorships and would likely be exempt from filing a BOI. However, 12 percent of farm operations of all sizes have business structures that now fall under fall under CTA requirements requiring a BOI filing. Besides farming operations, many other agriculture related businesses such as seed and chemical dealers, feed and supply stores, repair shops, etc., with those type of business structures will also fall under the CTA requirements. As mentioned, failure to comply with the BOI filing requirement can result in fines and felony charges. 
 
Farmers and other small businesses can find out more details on compliance with CTA requirements and can file a BOI online by going U.S. Treasury Department BOI filing website at:  https://www.fincen.gov/boi. A possible resource for more information on the CTA law and BOI requirements is the CPA or tax accountant that prepares the taxes for the farm business each year and is familiar with the farm’s business structure. Another possible resource is the ag lender for the businesses, as many banks and financial institutions are very familiar with FinCEN regulations and BOI requirements.
Finalizing 2024 Farm Machinery Custom Rates
Many farm operators provide some type of custom work or use of farm machinery to other farmers during the growing season, and payment is usually made following the completion of the harvest season. Sometimes, it can be difficult to determine a fair custom rate for certain farming practices, or for the use of various pieces of machinery. This could be the case in a year such as 2024, when the cost of machinery operation for diesel fuel, repairs, and labor may have changed from the beginning of the year until year-end.
 
One of the best resources for average custom rates is the annual “Iowa Farm Custom Rate Survey” that is coordinated and analyzed by Iowa State University. Each year in January, custom operators and farm managers are sampled regarding the expected farm custom rates for various farm operations. The custom rate summary, which is usually released in late February, lists the average custom rate, as well as a range in custom rates, for various tillage, planting, fertilizer and chemical application, grain harvesting, and forage harvesting functions on the farm. The Iowa Custom Rate Survey is probably the most widely used custom rate information that is available in the Upper Midwest. The complete 2024 “Iowa Farm Custom Rate Survey” is available on-line at the following Iowa State University web site: https://www.extension.iastate.edu/agdm/crops/html/a3-10.html
The average custom rates for farm operations in most areas of the Upper Midwest tend to be very close to the average Iowa custom rates. All listed custom rates in the Iowa survey results include fuel and labor, unless listed as rental rates or otherwise specified. These average rates are only meant to be a guide for custom rates, as actual custom rates charged may vary depending on increases in fuel costs, availability of custom operators, timeliness, field size, etc.
 
Based on the Iowa State data, most average custom rates for tillage, planting, and harvest operations in 2024 were fairly steady compared to the rates for similar operations in 2023. The 2024 custom farming rates for corn and soybean production are also expected to remain steady compared to a year earlier, following an increase of nearly 20 percent in the previous five years. The cost for new and used machinery has stabilized in 2024; however, fuel costs, repair costs, labor charges, and interest rates remain quite high. Any changes in these factors during the year may result in custom operators adjusting their final custom rates by year-end.
 
All listed custom rates in the Iowa Survey results include fuel, labor, repairs, depreciation, insurance, and interest, unless listed as rental rates or otherwise specified. The average price for diesel fuel was assumed to be $3.92 per gallon. A fuel price increase of $.50 per gallon would cause most custom rates to increase by approximately five percent. These average or median rates are only meant to be a guide for custom rates, as actual custom rates charged may vary depending on changes in fuel costs, availability of custom operators, timeliness, field size, etc. There are also many other specific situations among farmers and family members that share farm machinery that could lead to adjustments in final custom rates.
 
Custom Farming Agreements
Some farm operators hire custom work for specific farm operations with another farm operator, such as planting or combining, while other operators hire the typical crop field work through a custom farming agreement. The Iowa State Custom Rate Survey includes the average custom farming rates for corn, soybeans, and small grain. Custom farming agreements usually include tillage, planting, basic weed control, harvesting, and delivering grain to a specified location. Usually, any other additional or necessary farm practices that are performed during the year are paid outside of the custom farming agreement. Many farm operators negotiate these types of custom farming arrangements in the Spring of the year, while others wait until harvest is completed.
 
A good custom farming agreement includes a written contract that specifies the typical cropping practices to be performed and the amount of payment per acre to be paid to the custom operator by the landowner, and all other pertinent details for the custom farming arrangement. The average custom farming rates for corn and soybean production for 2024 are listed on the Iowa State Custom Rate Sheet; however, similar to the other custom rates, higher rates may be justified to cover increased costs of fuel, labor, etc. For more details on custom farming agreements, please refer to the Iowa State University “Ag Decision Maker” web site at: https://www.extension.iastate.edu/agdm/crops/html/a3-15.html
 
Calculating Farm Machinery Costs
The University of Minnesota periodically releases a publication titled: “Machinery Cost Estimates”, which was last updated earlier this year. This summary looks at the use-related (operating) cost of farm machinery, as well as the overhead (ownership) costs of the machinery, including fuel, repairs and maintenance, labor, depreciation, interest, insurance, and housing. This publication can help serve as a good guide to estimate the “true cost” of farm machinery ownership. The U of M publication and other resources on farm machinery ownership costs are available at: https://wlazarus.cfans.umn.edu/william-f-lazarus-farm-machinery-management. Another good resource for estimating the costs of farm machinery ownership is a publication from Iowa State University titled: “Estimating Farm Machinery Costs”, which includes a worksheet to calculate farm machinery costs. This publication is available at: https://www.extension.iastate.edu/agdm/crops/html/a3-29.html
Note - For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions
Phone - (507) 381-7960; E-mail - [email protected] 

With the advent of much lower corn and soybean market prices during 2024, together with reduced corn and soybean yields in some areas, many farmers and ag lenders are now wondering what the impact might be on potential farm program payments for corn and soybeans for the 2024 crop year. These payments would not be made until after October 1, 2025; however, it may be beneficial for 2025 cash flow planning purposes to make estimates regarding the potential 2024 farm program payments. Many crop producers in the Midwest were enrolled in the Ag Risk Coverage (ARC-CO) farm program choice on their corn and soybean base acres for the 2024 crop year. There will likely be a wide variation in the potential for 2024 ARC-CO payments from county-to-county, depending on where final 2024 county average yields for corn and soybeans end up.
Producers have a farm program choice each year on all eligible crops between the Ag Risk Coverage (ARC) and Price Loss Coverage (PLC) farm program choices. Payments in the PLC program are “price-only” and are based on comparing the 12-month national market-year average (MYA) price for a given crop compared to the established reference price for that year. If the 12-month MYA price is lower than the reference price, the producer would earn a PLC payment for that crop for the year. Enrollment in the PLC program has been fairly low in recent years due to corn and soybean commodity prices that have been well above the established PLC reference prices. The PLC reference prices for corn and soybeans increased for 2024; however, market-year average (MYA) prices for corn, soybeans and wheat will need to decline from current projections in order to earn PLC payments for the 2024 crop year.
The ARC-CO farm program choice includes a formula that uses 5-year average county-based yield calculations and 5-year average MYA prices to establish a benchmark revenue for the farm. The final calculated revenue for the farm is the actual county yield for a given year times the final MYA price for the year. If the final calculated revenue is lower than 86 percent of the benchmark revenue for the year there would be an ARC-CO payment for that year. There is also an “ARC-IC” farm program choice, which is based on farm-level yields; however, in many instances the ARC-IC program has had less payment potential than the ARC-CO program.
Many times understanding the formula for the ARC-CO programs can be a bit confusing. Sometimes the formula can be easier to understand by reviewing the data and results for the ARC-CO program from previous years. For information on 2023 ARC-CO payments, current and past benchmark yields, prices and revenues, historical ARC-CO payment levels, and other farm program information, producers should access the USDA ARC-PLC web site, which is at: www.fsa.usda.gov/arc-plc
The 2024 corn and soybean yields were above average in portions of the Midwest that avoided the extremely wet weather early in the growing season and were not impacted extensively by the very dry weather that existed late in the growing season. On the other hand, portions of southern Minnesota and adjoining areas on northwest Iowa had significantly reduced yields resulting from excess rainfall in May and June, together with very dry conditions in August and September.
In areas that have final 2024 county average yields that are above the established 2024 county benchmark yield for the county, there will likely be limited chances of receiving 2024 ARC-CO payment, unless MYA prices decline further from current levels. However, in portions of the region that have final county yields that are below county benchmark yields, there should be a possibility for some level of 2024 ARC-CO payments. The final 2024 county yield data for corn and soybeans in every State will not be available from the USDA National Agricultural Statistics Service (NASS) until late February, 2025.
The market year average (MYA) price for corn and soybeans is 12-month national average price in a given year from September 1st during the year of harvest until August 31st the following year, which is then finalized on
September 30th in the year following the production year for the crops. This is why any farm program payments that are earned for a given crop year are not paid by USDA until after October 1st in the following year. The marketing year to calculate MYA prices for wheat and other small grain crops is from June 1st in the year of harvest until May 31st the following year.
The 12-month national average MYA price for a given crop is based on the monthly average market price received by farm operators across the United States, which is then “weighted” at the end of the year, based on the volume of bushels sold in each month. The MYA price estimates can be tracked on a monthly basis in the monthly USDA World Agricultural Supply and Demand Estimates (WASDE) reports. The next WASDE report will be released on December 10, 2024.
Many crop producers in the Midwest are enrolled in the Ag Risk Coverage (ARC-CO) farm program choice on their crop base acres for the 2024 crop year. The 2024 benchmark prices for potential 2024 ARC-CO payments for corn, soybeans, and wheat were all increased from 2023 price levels. The reference prices for potential PLC payments were also increased for corn and soybeans for 2024, but stayed the same for wheat. The marketing year to determine the 2024 market year average (MYA) prices is from September 1, 2024 through August 31, 2025 for corn and soybeans, and June 1, 2024 through May 31, 2025 for wheat.
Summary of 2024 potential PLC and ARC-CO payments:
•Corn --- The 2024 PLC corn reference price is $4.01 per bushel and the 2024 corn benchmark price for ARC-CO payments is $4.85 per bushel. Based on the October USDA WASDE report, the current estimate for the 2024 MYA corn price is $4.10 per bushel. This is only $.09 per bushel above the threshold for 2024 corn PLC payments; however, it is $.75 below the 2024 corn benchmark price. At the current MYA 2024 corn price estimate, 2024 corn ARC-CO payments would initiated with a final 2024 county corn yield that is very near the 2024 county benchmark yield.
•Soybeans --- The 2024 PLC soybean reference price is $9.26 per bushel and the 2024 soybean benchmark price for ARC-CO payments is $11.12 per bushel. Based on the October WASDE report, the current estimate for the 2024 MYA soybean price is $10.80 per bushel. This is $1.54 per bushel above the threshold for 2024 PLC payments; however it is $.32 below the 2024 soybean benchmark price. At the current soybean MYA price estimate, ARC-CO payments would initiated with a 2024 county soybean yield reduction that is about 11-12 percent below the county benchmark yield.
•Wheat --- The 2024 PLC wheat reference price is $5.50 per bushel and the 2024 wheat benchmark price for ARC-CO payments is $6.21 per bushel. Based on the October WASDE report, the current estimate for the 2024 MYA wheat price is $5.70 per bushel. This is only $.20 per bushel above the threshold for 2024 wheat PLC payments and is $.51 below the 2024 wheat benchmark price. At the current wheat MYA price estimate, 2024 wheat ARC-CO payments would initiated with a final county wheat yield reduction of about 6 percent below the county benchmark yield.
There are many variables when it comes to estimating 2024 ARC-CO payments for corn and soybeans, since those payments are based both on final county average yields and final market year average (MYA) prices. We will have a much better handle on making sound ARC-CO payment estimates once we get the NASS yield data in February and get further into the 12-month market year. For information on current and past benchmark yields, prices and revenues, historical ARC-CO payment levels, and other farm program information, producers should access the USDA ARC-PLC web site, which is at: www.fsa.usda.gov/arc-plc
Note --- For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Phone --- (507) 381-7960; E-mail --- [email protected]

Commodity Credit Corporation (CCC) commodity loans on harvested corn, soybeans and wheat were regularly used by farm operators in the 1990’s and early 2000’s, as well as from 2015 to 2019, as a grain marketing tool. The use of CCC commodity loans dropped off considerably from 2008-2014 and again from 2020-2022, when grain prices reached their highest levels in many years. As farmers finish up the 2024 harvest season, the use of marketing assistance loans (MAL’s), which are the same as CCC commodity loans, has taken on more significance as an option in setting up post-harvest grain marketing plans for corn and soybeans.
The CCC commodity loans (MAL’s) are originated through county Farm Service Agency (FSA) offices after the grain has been harvested. The MAL’s are 9-month loans from the time the loan is established. A marketing assistance loan can be established both on farm stored grain and on grain in commercial storage with a warehouse receipt. Producers receive the value of the loan at the time the CCC loan is established. The loan can be repaid at any time during the 9-month loan period, by repaying the amount of the loan principal plus the accrued interest.
The 2018 Farm Bill established national loan rates for the various commodities that are eligible for the marketing assistance loans. Following are the 2024 national loan rates for common crops in the Upper Midwest:
· Corn --------- $2.20 per bushel
· Soybeans --- $6.20 per bushel
· Wheat ------- $3.38 per bushel
· Barley ------- $2.50 per bushel
· Oats --------- $2.00 per bushel
· Grain Sorghum --- $2.20 per bushel
The county loan rates are then adjusted higher or lower than national rates, based on local commodity price differentials compared to national price levels. Following is the range of county corn and soybean loan rates for MAL’s in the Upper Midwest States:
· Minnesota -------- Corn = $2.03 to $2.14/bu.; Soybeans = $5.85 to $6.18/bu.
· Iowa --------------- Corn = $2.08 to $2.30/bu.; Soybeans = $6.08 to $6.34/bu.
· Nebraska ---------- Corn = $2.05 to $2.28/bu.; Soybeans = $5.83 to $6.19/bu.
· South Dakota ----- Corn = $2.07 to $2.22/bu.; Soybeans = $5.70 to $6.13/bu.
· North Dakota ----- Corn = $2.00 to $2.22/bu.; Soybeans = $5.70 to $6.00/bu.
· Wisconsin --------- Corn = $2.04 to $2.17/bu.; Soybeans = $6.07 to $6.25/bu.
The MAL loan interest rate is adjusted monthly and is set up at one percent above the CCC borrowing rate from the U.S. Treasury. The interest rate on MAL loans is fixed for the entire term of the 9-month MAL, except for a potential CCC interest rate adjustment on January 1. The current interest rate on marketing assistance loans (as of 11-01-24) is 5.125 percent, which compares to an interest rate of 7.5 to 9 percent for short-term financing at many commercial ag lending institutions. Producers only pay interest for the time that the MAL is in place. Example --- $200,000 MAL corn loan at 5.125 percent interest for 180 days ($200,000 x .05125) / 365 x 180 = $5,055 interest payment for 6 months, which compares to $8,384 on a similar loan at 8.5 interest for 180 days).
Farm operators have the flexibility to place grain under a MAL at a local FSA office any time after the grain has been harvested, so they could take out the MAL in November or December, 2024, or wait until after January 1, 2025. Producers also have the flexibility to treat the commodity loan as either “income” or as a “loan” when the loan proceeds are received. Either of these decisions can have income tax implications, depending on how and when the loan proceeds are received. It is best to consult with a tax consultant before determining the timing and the preferred method of receiving the loan proceeds.
If commodity prices drop to levels that are lower than county loan rates, eligible producers would potentially be eligible to release the grain that is under a marketing assistance loan at a rate that is lower than the county loan rate. FSA issues a “posted county price” (PCP) for commodities that are eligible for MAL’s, which are updated and posted daily at local FSA offices, or available on county FSA websites. If the PCP is lower than the county loan rate, the producer could realize a “marketing loan gain” (MLG), if the grain is released at that lower PCP. (Example --- a producer places corn under a MAL at $2.10 per bushel, a few months later the PCP is $1.90 per bushel, resulting in the potential of a marketing loan gain of $.20 per bushel on the day the corn loan is released.)
If the PCP drops below the county MAL loan rate, producers also have the option to collect a loan deficiency payment (LDP) on a commodity, in lieu of putting the grain under a commodity loan. The LDP calculation is similar to the calculation for marketing loan gains. Grain that is already under a commodity loan is not eligible for a LDP, and a LDP can only be utilized once on the same bushels of grain. There has not been significant LDP eligibility for corn and soybeans since the early 2000’s and we do not anticipate any LDP opportunities for the 2024 corn and soybean crop that is being placed in storage.
Producers must be eligible for USDA farm program benefits and must have submitted an acreage report at the FSA office for 2024 to be eligible for marketing assistance loans on this year’s crop production. Producers must maintain “beneficial interest” in the grain while it is under a MAL. Beneficial interest means that the producer maintains control and title of the commodity while it is under a commodity loan. Farmers should contact their local FSA office to release any grain that is under a marketing assistance loan before it is delivered to market (“call before you haul”).
Following are some reasons that farm operators may want to consider utilizing marketing assistance loans (MAL’s) as part of their grain marketing strategies:
· Provides short-term credit at relatively low and stable interest rates.
· Loan funds can be used to pay post-harvest expenses and land rental payments for the current year or for prepaid crop inputs (seed, fertilizer, etc.) for the following crop year.
· Loan funds can also provide the necessary funds to make year-end or January principal and interest payments on term loans and real estate loans.
· Allows a producer to receive partial compensation for corn and soybeans during or following the Fall harvest season, when commodity prices are traditionally lower than average.
· Allows a producer the flexibility to market the grain in future months after the grain has been placed under a MAL, including forward pricing the grain for future delivery (remember that the commodity loan must be satisfied at the FSA office before the grain is delivered.)
· Commodity loans can also be used by livestock producers that plan to feed the corn or other grain, which is followed by just releasing the grain that is under loan as it is fed to livestock.
· If commodity prices decline below the county CCC loan rates, the grain that is under loan can be released at the lower price, or producers can collect a loan deficiency payment (LDP).
In Minnesota, FSA offices file a Central Notification System (CNS) form with the Minnesota Secretary of State Office on all grain used as security for a marketing assistance loan. These forms are similar to the CNS forms that are filed by ag lenders for farm operating loans to guarantee the transfer of funds when grain or livestock is sold to cover outstanding loan balances.
For further information on USDA marketing assistance loans (MAL’s) and county loan rates for various commodities, farm operators should contact their local FSA office, or go to the following website: https://www.fsa.usda.gov/programs-and-services/price-support/Index
Note --- For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Phone --- (507) 381-7960; E-mail --- [email protected]
​

The 2024 Fall harvest season had been progressing at a very fast pace across most of the Upper Midwest, with harvest nearly completed in many areas. The combination of above normal temperatures together with zero or very limited rainfall from late September until late October has allowed corn and soybean harvest to progress rapidly in most of the Corn Belt, with very few glitches. Very few locations had received enough precipitation during October to cause any delays in harvest progress and Fall tillage. The corn and soybean yield levels have been highly variable across the Midwest, with portions of Iowa, Illinois, and the Eastern Corn Belt having some of their best yields in recent years, while farmers in a large area of Southern Minnesota realizing some of their lowest corn and soybean yields in the past two decades.
 
Based on the USDA Crop Progress Report on October 20, it was estimated that 81 percent of the soybeans in the U.S. had been harvested, which was above the 72 percent harvested by that date in 2023 and was well above the 5-year average of 67 percent harvested. In the Upper Midwest, Minnesota led the way with 95 percent of the soybeans harvested by October 20, followed by Wisconsin at 93 percent, Iowa and South Dakota at 91 percent, North Dakota at 89 percent, and Nebraska at 85 percent. Other soybean harvest figures as of October 20 were Illinois at 76 percent, Indiana at 75 percent, and Ohio at 78 percent. All states were slightly ahead soybean harvest progress a year ago in late October and were significantly ahead of the 5-year average progress.
 
It was estimated that 65 percent of the corn in the U.S. was harvested by October 20, which was well ahead of the 55 percent harvest rate on that date in 2023, as well as the 5-year average of 52 percent harvested. Iowa was the leader in harvested corn acres in the Midwest with 68 percent harvested, followed by Illinois at 67 percent, Minnesota at 66 percent, Nebraska at 63 percent, and Indiana at 61 percent harvested. Other corn harvest figures in the October 20 report were South Dakota at 56 percent harvested, Ohio at 51 percent, North Dakota at 47 percent, and Wisconsin at 44 percent harvested. By comparison, all of the listed states were slightly ahead of the corn harvest pace a year ago and were well ahead of the 5-year average level of corn harvested by October 20.
 
Corn harvest in Minnesota has progressed more rapidly in many portions of southern and western Minnesota, as well as adjoining areas of eastern South Dakota and western Iowa, with many farmers nearing completion harvest for the 2024 growing season. Corn harvest in the eastern half of Minnesota, especially in southeast Minnesota, eastern Iowa, and Wisconsin has been somewhat slower due to having crops that were a bit later maturing and having higher yield levels. Normal planting dates in 2024, together with above normal growing degree units in the summer months in most areas, allowed most corn and soybeans to reach full maturity by late September. Later planted crops and replanted soybeans in the very wet areas of southern Minnesota and northwest Iowa did not mature until after October 1st.
 
Overall, the reported soybean yields across the Midwest have been highly variable, mainly due to excessive rainfall in some locations early in the growing season and limited rainfall late in the growing season in portions of the region. In some cases the same areas of southern Minnesota and northwest Iowa that had near-record rainfall during June also experienced near-record dryness during September and early October. The term “disappointing” was heard a lot when referring to 2024 soybean yields in many portions of southern and western Minnesota, meaning that yields were below the more optimistic expectations that existed in August. Many soybean yields in the region were 10-25 percent below crop insurance APH (average) yields. Most of the western and northern Corn Belt had soybean yields that were lower than the 2022 and 2023 soybean yield levels, while many areas of Iowa, Illinois, and the eastern Corn Belt experienced above average soybean yields in 2024.
 
2024 corn yields have also been highly variable across the Corn Belt. Similar to soybeans, corn yields this year have seemed to be more consistent in much of Iowa and Illinois, and other areas of the eastern Corn Belt that benefitted from more favorable growing conditions from May to July than other areas. Corn yields in many portions of the Upper Midwest seemed too vary considerably, depending on corn hybrids, planting dates, and the level of excessive rainfall early the growing season. There have been some “whole field” yield reports of 200 bushels per acre or higher in southern Minnesota and northern Iowa; however, there have also been yield reports below 100 bushels per acre at some locations in south central and southwest Minnesota. Overall, the 2024 corn yields in the Upper Midwest are not nearly as consistent as the past few years and for many farmers in southern Minnesota will be 10-20 percent below crop insurance APH (average) yields.
 
One piece of good news for producers regarding the 2024 corn harvest has been the harvest moisture of the corn coming out of the field. Most of the corn being harvested this Fall has been under 18 percent moisture, which means that a large portion of this year’s corn crop could go directly in the bin for storage, without the need for additional drying, which is a cost saving to farmers. Corn should be dried to about 15-16 percent moisture before going into the grain bin for safe storage until next Spring or Summer. Some corn that has been harvested was near 11-13 percent moisture, which is actually too dry and results in harvest losses for producers. The test weight of the corn being harvested has also been a pleasant surprise this year, with most corn having a test weight at or above the standard corn test weight of 56 pounds per bushel.
 
Drought Conditions Expand
Limited rainfall and above average temperatures from late August until late October has raised drought concern in most of the Midwest and Plains States. Most areas of Minnesota, Iowa, South Dakota, Nebraska, Kansas, Missouri, and Wisconsin was listed in “moderate” to “severe” drought by late October, based on the weekly U.S. Drought Monitor report. Much of Illinois, Indiana, Ohio, and Michigan were also included with a drought designation. By comparison, The U.S. Drought Monitor report on August 20 listed only portions on the southern Plains States, Kansas, and Ohio in any of the drought categories.
 
Total precipitation measured at the University of Minnesota Southern Research and Outreach Center at Waseca during September was only .48 inches, making it the second driest September on record in the over 100 years of weather data at the site. As of October 28, only .05 of precipitation had been recorded in October. This compares to normal precipitation levels at Waseca of 4.12 inches in September and 2.77 inches in October. For the year, total precipitation is very near normal at Waseca, which is largely due to the 10+ inches above average precipitation that was recorded in May and June this year.
 
2024 was also the sixth warmest September at the Waseca location, averaging 66.9 degrees Fahrenheit, which was just 1.6 degrees below the warmest-ever average September temperature of 68.5 degrees in 1931. Average temperature in October have also been over 8 degrees above normal. The first frost event at Waseca occurred on October 7, which ended the 2024 growing season. A total of 2,781 growing degree units (GDU’s) were recorded from May 1 until October 7 this year, which is 11 percent above the season average total of 2,509 GDU’s.   
 
Fall tillage and manure applications have been occurring as soon as harvest is completed; however, those operations have been more challenging in many locations due to very dry soil conditions. Producers in some areas of the region typically apply nitrogen fertilizer for the corn crop that will be raised in the following year, once the current year’s harvest is completed. It is recommended to wait until soil temperatures are 50 degrees Fahrenheit or lower to apply nitrogen in the fall in order to avoid significant losses. Soil temperatures have been above that level through most of October. Farm operators are reminded to follow the statewide restrictions for fall nitrogen fertilizer application in their area, and to check with their State Department of Agriculture or Land Grant University for fall nitrogen application recommendations and requirements in their State.
Note - For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions
Phone - (507) 381-7960; E-mail - [email protected]

​Arriving at equitable land rental rates is always an ongoing challenge for farm operators and landlords alike, which will likely be an even bigger challenge for the 2025 growing season. Many times, land rental rates for a coming crop year are based on the profitability in crop production in the previous year or two before. In some cases, this can present profitability challenges for farm operators, if grain prices drop or there are yield challenges. On the other hand, there can be extra profit for farm operators in years with above average yields and higher levels of crop prices. Many landlords have been gradually increasing cash rental rates in the past few years (2019-2024). With the advent of much lower grain prices late in the past 12-plus months, along with reduced 2024 crop yields in portions of the Upper Midwest, one wonders if it will have an impact on 2025 cash rental rates. However, from a landlord perspective, it should be noted that property taxes have increased substantially in many areas.
•
Approximately two-thirds of the farmland in the Upper Midwest is under some type of cash rental agreement. Based on farm business management land rental data compiled by the University of Minnesota, average rental rates from 2015 to 2019 in Minnesota declined by 10-20 percent. Based on the U of M data, average land rental rates in Minnesota increased by 6 percent from 2022 to 2023, and increased by over 25 percent from 2019 to 2023. According to USDA Cash Rental Summary released in late August of 2024, average cash rental rates in Minnesota were nearly the same in 2024 as the average rental rates in 2023. Farm management analysts expect 2025 cash rental rates in most areas to stay fairly steady or maybe decline slightly in most areas, given the projected continuation lower corn and soybean prices and tight profit margins for 2025.
•
The commodity prices for corn and soybeans in 2022 and early 2023 reached the highest levels since 2012-13, due to increased domestic usage and higher export levels of U.S. corn and soybeans and the associated decreases in the nation’s grain supplies. The final USDA national market year average (MYA) crop prices for the 2023-2024 marketing year were $4.65 per bushel for corn and $12.50 per bushel for soybeans. The MYA prices are the average farm-level prices, calculated from September 1 in the year of harvest, until August 31 of the following year. The MYA corn prices in other recent years were $6.54 per bushel in 2022-23, $6.00 per bushel in 2021-22, $4.53 per bushel in 2020-21, and $3.56 per bushel in 2019-20. Recent MYA soybean prices were $14.20 per bushel in 2022-23, $13.30 per bushel in 2021-22, and $10.80 per bushel for 2020-21, and $8.57/bu. in 2019-20.
•
USDA is estimating the MYA average prices for the 2024-25 marketing year at $4.10/bu. for corn and $10.80/bu. for soybeans (as of 10-01-24). Current forward cash prices for Fall delivery of the 2025 crop year are near $4.00-$4.25 per bushel for corn and $10.00-$10.50 per bushel for soybeans at many locations in the Upper Midwest. Many ag lenders are using $4.50 per bushel for corn and $10.50 per bushel for soybeans as 2025 planning prices for 2025 crop budgets. The USDA long-range price projections for the next 5 years for average on-farm commodity prices are near $4.00 per bushel for corn and $10.50 per bushel for soybeans.
•
Many farm operators had significantly higher crop input costs in 2023 and 2024, as compared to 2022 or 2021. Fertilizer costs eased somewhat in 2024; however most other crop input costs for seed, chemicals, fuel, labor and repairs are expected to remain relatively high in the coming year compared to recent years. Based on Southern Minnesota Farm Business Management (FBM) records, the average total direct cost in 2023 for seed, fertilizer, chemicals, fuel, etc. on cash rental acres, excluding land rents, was near $631 per acre for corn and near $316 per acre for soybeans. The 2023 FBM records showed an average of $120 per acre on corn acres and $75 per acre on soybean acres for overhead expenses, which includes machinery costs, hired labor, insurance, and other ongoing expenses, but does not include any net return to the farm operator. In addition, short-term interest rates for farm operating loans have doubled in many instances in the past two years, which further adds to the cost of production. Most experts project input costs for 2025 to remain fairly high, with possibly a slight decrease in short-term interest rates.  The combination of relatively high crop input costs and continued lower commodity prices could result in some challenging breakeven price levels for 2025, especially if land rental rates are at quite high levels.
Typically, Southern Minnesota farm operators use average yields near 200 bushels per acre for corn and 60 bushels per acre for soybeans for cash flow planning purposes. If the direct expenses for corn are $635 per acre, with overhead expenses of $125 per acre, and a land rental rate at $275 per acre, the total expenses, before any allocation for labor and management would be $1,030 per acre. With a corn yield of 200 bushels per acre, the breakeven price to cover the cost of production and land rent would be approximately $5.15 per bushel, which would increase to $5.73 per bushel if the corn yield drops to 180 bushels per acre. If a $60 per acre allocation for labor and management (family living expenses) is included, the corn price breakeven levels would rise to $5.45 per bushel with a 200 bushel per acre yield, and $6.06 per bushel with a 180 bushel per acre yield. If the cash rental rate or other expenses are $50 per acre higher than estimates, breakeven levels increase to $5.70 per bushel at 200 bushels per acre and to $6.34 per bushel at 180 bushels per acre.
•
Similarly, with soybeans, using direct expenses of $320 per acre, overhead expenses of $80 per acre, land rent of $275 per acre, and a management fee of $60 per acre, the total costs would be $735 per acre. The breakeven soybean price to cover the cost of production and land rent would be about $12.25 per bushel with a yield of 60 bushels per acre, which would increase to approximately $14.70 per bushel with a yield of 50 bushels per acre. There can be big differences in crop yields and expenses from farm-to-farm, which can cause breakeven prices to vary compared to the average. Based on 2023 FBM records for Southern Minnesota, the average breakeven prices on cash rented land to cover direct expenses and overhead costs, plus about $55 per acre return to management was $4.96 per bushel for corn and $11.71 per bushel for soybeans. The 2023 FBM average yields in the same region were 203 bushels per acre for corn and 57 bushels per acre for soybeans.
Considerations for
Flexible  Cash Leases
An alternative to a flat cash rental rate that may be difficult to “cash flow” would be for a farm operator and landlord to consider using a “flexible cash lease” agreement that allows the final cash rental rate to vary as crop prices and/or yields vary or exceed established targets. The use of a flexible cash rental lease is potentially fairer to both the landlord and the farm operator, depending on the situation and how the lease is set up. Most flexible leases have been modified in recent years into a “bonus rent” agreement that uses a reasonable “base rental rate” that can “flex” upward with an added rental payment to the landlord, if the “base” crop yield and/or base crop prices (or the base crop revenue per acre) are exceeded; however, the final rental rate does not drop below the base rental rate. The big key, regardless of the flexible lease agreement, is that both the landlord and tenant fully understand the rental agreement, and the calculations that are used to determine the final rental rate.
•
Utilizing “flexible cash lease agreements” between farm operators and landlords can be a good management strategy as an alternative to extremely high straight cash rental rates; however, these agreements need to be fair and equitable to all parties. Landlords also need to be willing to adjust the “base” cash rental rates lower as necessary if crop margins become quite tight in future years. It is extremely important that all aspects of a flexible land rental lease agreement be detailed in a signed written rental contract that includes the base rent, yield, and price determination, as well as other provisions of a flex lease. Successful “flexible cash lease agreements”, just as any other long-term cash rental agreement, have always involved cooperation, trust, and good communication between the farm operator and the landlord.
Resources for Land Rental Agreements and Flexible Leases
For additional information on flexible rental leases, land rental rates, and 2025 crop budgets, as well as sample lease contracts, please forward an e-mail to: [email protected]. Some other good resources on
flexible cash leases, including sample cash rental contracts, are available on the Iowa State University “Ag Decision Maker” web site at: http://www.extension.iastate.edu/agdm/, as well as through University of Minnesota Extension at: https://extension.umn.edu/business/farmland-rent-and-economics.
Note - For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Phone - (507) 381-7960; E-mail - [email protected]

​Based on yield reports from many areas of the Upper Midwest, it is likely that a significant number of corn and soybean producers may qualify for crop insurance indem-nity payments in 2024. The excess rainfall and drown-out damage conditions early in the growing season and very dry conditions at the end of the growing season, together with the price declines from the crop insurance base prices on March 1, increases the likelihood of 2024 crop insurance indemnity payments. Given the much tighter breakeven margins in corn and soybean production in 2024, farmers and ag lenders are now trying to estimate the amount potential crop insurance indemnity payments that may occur following harvest this year.
With Federal Crop Insurance, every year is different, and with the multiple options available to producers, there are many variable results from crop insurance coverage at harvest time. The 2024 crop year will be no different, with some producers choosing Yield Protection (YP) policies (yield only) versus Revenue Protection (RP) policies (yield and price), and producers having different levels of coverage on various crops. Producers also vary on having “optional units” versus “enterprise units” for their crop insurance coverage. In addition, some producers also have enhanced insurance coverage through private insurance companies, or through the “Supplemental Crop Option” (SCO) and Enhanced Coverage Option (ECO) policies that were available in 2024.
In the Midwest, most corn and soybean producers in recent years have tended to secure some level of revenue protection (RP) crop insurance coverage, in order to have the flexibility of insurance coverage for reduced yields, as well as in instances where the harvest price drops below initial base price. The established base prices for 2024 RP crop insurance policies were $4.66 per bushel for corn and $11.55 per bushel for soybeans. These base prices will serve as the final price to calculate revenue guarantees for determining potential RP crop insurance indemnity payments for corn and soybeans in 2024.
The final harvest price for RP insurance policies is based on the average CBOT December corn futures and CBOT November soybean futures during the month of Octo-ber, with prices finalized on November 1, 2024. The harvest price is used to calculate the value of the actual harvested bushels for all RP insurance policies. As of October 9, the crop insurance CBOT price estimates were $4.27 per bushel for December corn futures and $10.41 per bushel for November soybean futures, which are well below the spring base prices.
The lower crop insurance harvest prices greatly increase the likelihood of crop payments for Upper Midwest corn and soybean producers that have 80% and 85% RP in-surance policies for 2024. Based on current CBOT December corn price projections, 2024 indemnity payments for corn could begin at final yields that are at about 93 percent the 2024 APH yields for farmers with 85% RP insurance policies. For example, with an 85% RP policy on corn with a 200 bushel per acre APH yield and a $4.27 per bushel harvest price, 2024 crop insurance indemnity payments would begin at a yield just over 185 bushels per acre (93% of APH yield). If the harvest price increases to $4.50 per bushel, the payments would begin at a yield below 176 bushels per acre (88% of APH yield). For soybeans with an 85% RP policy and a 60 bushel per acre APH and a $10.41 per bushel harvest price, crop insurance payments would begin at about 56.5 bushels per acre or approximately 95 percent of the APH yield.
Farmers had the option of choosing RP crop insurance coverage levels from 60% to 85% for corn and soybeans. for 2024. Many Midwest corn and soybean producers utilize “enterprise units” for their crop insurance coverage, which combines all acres of a crop in a given county into one crop insurance unit, rather than choosing “optional units” that allow producers to insure crops separately in each township section. The level of insurance coverage and the type of crop insurance units that were selected will greatly affect the potential crop insurance indemnity payments for 2024.
Simple Method to Estimate Potential 2024 Crop Insurance Payments
Many farmers and ag lenders would like to estimate potential 2023 crop insurance indemnity payments. One simple method to estimate potential insurance payments is to calculate the estimated 2024 “threshold yield” for crop insurance payments to begin for corn and soybeans with Revenue Protection (RP) crop insurance policies. If the final farm yield is lower than the “threshold yield”, there is potential for 2024 crop insurance indemnity payments, depending on the final harvest price for corn or soybeans. Following is the formula to calculate the “threshold yield” at different APH yields and levels of insurance coverage, as well as the potential gross insurance in-demnity payment:
Multiply the APH yield on a farm times the crop insurance spring price times the crop insurance coverage level to get the crop insurance guarantee, and then divide by the estimated fall harvest price to arrive at the “threshold yield” where RP crop insurance payments are initiated. (The spring prices were $4.66 per bushel for corn and $11.55 per bushel for soybeans.)
Following that calculation, subtract the actual farm yield from the “threshold yield” and multiply the difference times the projected harvest price to arrive at the estimated gross crop insurance indemnity payment. Be sure to account for the differences in “enterprise” and “optional” units. Remember that this is just an estimate of gross payments, and that this calculation does not account for deductions for crop insurance premium payments. The calculation will vary as the estimated crop insurance harvest prices change from day-to-day. Harvest prices will be finalized on November 1, 2024. The estimated crop insurance harvest prices are available on the RMA web-site at: https://prodwebnlb.rma.usda.gov/apps/PriceDiscovery.
Following are examples of calculations for crop insurance payment estimates for corn and soybeans:
Corn
(85% RP Policy; 200 APH; 170 bu./A farm yield; projected harvest price of $4.27/bu.)
200 bu./A APH x $4.66/bu. x .85 = $720.20 guarantee divided by $4.27/bu. = 185.53 bu./A. “threshold yield”.
185.53 bu./A. – 170 bu./A = 15.53 bu./A x $4.27/bu. = $66.32/A. est. insurance indemnity payment
Soybeans
(85% RP Policy; 60 APH; 45 bu./A farm yield; projected harvest price of $10.41/bu.)
60bu./A APH x $11.55/bu. x .85 = $589.05 guarantee divided by $10.41/bu. = 56.59 bu./A. “threshold yield”.
56.59 bu./A. – 45 bu./A = 11.59 bu./A x $10.41//bu. = $120.66/A. est. crop insurance indemnity payment
Producers that have crop revenue losses in 2024, which could result in potential crop insurance indemnity payments, should properly document the yield losses, regard-less of their type or level of insurance coverage. A reputable crop insurance agent is the best source of information to make estimates for potential 2024 crop insurance indemnity payments, and to find out about documentation requirements for crop insurance losses. It is important for producers who are facing crop losses in 2024 to understand their crop insurance coverage and the calculations used to determine crop insurance indemnity payments.
Kent Thiesse has prepared an Information Sheet titled “2024 Crop Insurance Payment Potential”, as well as a spreadsheet to estimate potential 2024 crop insurance in-demnity payments. Both are available by contacting: [email protected]. The University of Illinois FarmDoc web site also contains some good crop insurance in-formation and spreadsheets to estimate crop insurance payments. The FarmDoc web site is located at: https://farmdoc.illinois.edu/crop-insurance.
Note - For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Phone - (507) 381-7960; E-mail - [email protected]
For more information, please visit our website:
www.fairmontphotopress.com/kent-thiesse

The 2024 Presidential election has gathered a majority of the news headlines in recent weeks, as we head to National Election Day on November 5. As we have listened to the presidential debates, interviews, and campaign ads, very little discussion has been focused on issues directly related to agriculture or family farm businesses. However, there are many key issues affecting farmers and the ag industry during this election season. It is also important to remember that there are other elections on November 5th besides the Presidential election, which includes congressional races, state legislative races, and local races for county commissioners, school boards, etc. It is important to pay attention to where the various candidates stand on the issues that are most important your business and your family.
Following are some of the main issues that are important to agriculture during the 2024 election:
• Passing a New Farm Bill -The inability of Congress to pass a new Farm Bill and the provisions in the next Farm Bill are front and center for many farmers and most ag organizations in 2024. The U.S. House Agriculture passed its version of a new Farm Bill earlier this year; however, the bill has not been voted on yet by the entire U.S. House of Representatives. The U.S. Senate has not yet released any version of a new Farm Bill and has offered no timeline for any action on a new Farm Bill.
Most of the congressional candidates from the major political parties in the Upper Midwest agree on many aspects of the next Farm Bill, especially as it related to enhancing and improving the “safety net” programs for farmers. Many of the agriculture leaders, as well as several of the candidates, have proposed increasing crop reference prices, enhancing crop insurance options, and improving risk protection opportunities for livestock producers and farmers that raise specialty crops.
There has also considerable discussion regarding the importance of conservation programs and how those programs can enhance ongoing carbon sequestration efforts in the U.S. Most members of both political parties agree that the nutrition title of the Farm Bill, which accounts for over 80 percent of the annual Farm Bill spending, should not be separated from the Farm Bill; however, there are some differences on specific provisions in the nutrition title. There are also many other important programs and provisions that are part of the existing titles in the Farm Bill, including rural development, ag research and extension, trade promotion, livestock disease mitigation, beginning farmer loans, and hemp production.
The 2018 Farm Bill originally expired on September 30, 2023; however, the current Farm Bill was extended until September 30, 2024. Now the question is: “Will we get a new Farm Bill passed in time for the 2025 growing season in the Midwest, or will we have another one-year extension until September 30, 2025 ?” While there is still a possibility that a new Farm Bill might be completed during “lame-duck” congressional session following the 2024 election, most ag experts feel that another one-year extension of the current Farm Bill until September 30, 2025 is more likely. The experts include the rather large cost of the Farm Bill, differences on nutrition, conservation, and other policies, as well as the continued partisan political divide in the U.S., as the main reasons that a new Farm Bill is not likely to pass later this year.
•Downturn in the Farm Economy - The continued tight margins and low profitability in farming seems to be on everybody’s mind in ag country this Fall. Profit margins in crop production have worsened considerably in the past two years, which could put some farm operations at the brink of financial disaster. Crop production expenses and land rental rates have increased substantially in 2023 and 2024, while crop prices for corn, soybeans and wheat have remained below breakeven levels, and are now at the lowest levels in several years. For Upper Midwest farm operators that are experiencing crop losses in 2024 due to weather issues, the financial situation is likely to be even more severe.
The struggling profit margins for crop producers are somewhat linked to discussions on the new Farm Bill and the need for improved risk management tools for farmers. Many farm operators are wondering if Congress will pass a supplemental agriculture disaster program after this year’s election to deal with 2023 and 2024 crop losses. The last disaster program of this type was only inclusive through the 2022 crop year.
Much of the livestock sector has not fared much better from a profitability standpoint in the past couple of years. Iowa and Minnesota are the top two swine production states in the U.S. and most swine producers have had very low or negative profit margins in the past two years. Dairy profit margins have improved in recent months; however, that followed a long period of very low profit margins that forced several dairy farmers to discontinue operation. Payments through the Dairy Margin Coverage (DMC) program, which is authorized through the Farm Bill, helped prevent even more small-to-medium sized dairy farms from being forced to exit the industry. Dairy and poultry producers have also been dealing with the impacts of the highly pathogenic avian influenza (H5N1) outbreak in certain areas of the U.S.
• Importance of Ag Exports and Trade Agreements - Most agriculture leaders and farm operators are very focused on the importance of having strong trade agreements and solid markets for ag exports. Many farmers are quite concerned about the potential for future trade disputes between the United States and China, as well as the lack of any new trade agreements with other countries. There is also some concern regarding the future of the current trade agreements with China and other countries, as well as with the current United States-Mexico-Canada Agreement (USMCA) trade agreement. China, Canada and Mexico are the three largest trading partners for U.S. ag exports.
• Future of the Renewable Fuels Industry - Many farm operators, agriculture and community leaders, and investors in renewable energy plants, are concerned about government policies related to the development and use of ethanol and other biofuels. Many States in the Upper Midwest, including Minnesota, have a very strong and well-established corn-based ethanol industry, which utilizes over 35 percent of the corn produced each year in the United States. The U.S. Environmental Protection Agency (EPA) has been slow to implement E-15 as an ethanol fuel blend for wide-scale use in the U.S. The renewable diesel industry in the U.S. has also been growing significantly in recent years, which has become more important for soybean usage in the past few of years. In addition to the direct benefits to farmers, renewable energy plants have become cornerstones in rural communities by providing jobs, adding to the local tax base, and enhancing the overall economic vitality of the communities.
Many leaders point to “sustainable aviation fuel” (SAF) as a key growth opportunity for both the ethanol and renewable diesel industries in the future. However, federal agencies have set up very stringent farm-level practices that farmers must follow in order to be eligible to sell their corn and soybeans to processing plants for SAF production. Due to the restrictions being placed on U.S. farmers and the processing plants, some feedstock for SAF production, such as used cooking oil, is being imported from other countries. Ag leaders wonder how the Presidential and congressional elections, as well as statewide elections, might shape the future for ethanol and renewable diesel.
The new Farm Bill, the struggling rural economy, ag trade agreements, and the future of renewable energy issues are only a few of the issues affecting farm families and rural businesses. There are many other issues and programs that affect rural families, businesses, and communities in a variety of ways. These include dealing with the economic challenges currently being experienced by farmers and rural businesses, impact of labor policies and shortages on rural communities, family health care access and costs, expansion of broadband coverage in portions of rural areas, infrastructure needs, and other issues affecting agriculture and rural communities. Elections do have consequences, so take time to find out where the candidates for national, state, and local offices stand on the issues that are most important to your family, your business, and your community.
Note - For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Phone - (507) 381-7960; E-mail - [email protected]
​

On any given day, farm operators and others can get grain price quotes from the CME Group, also known as the Chicago Board of Trade (CBOT), in “real-time” on their computer or I-phone. Almost as quickly, they can get current and future corn and soybean market price quotes from local grain elevators, ethanol plants, and processing plants. The difference between the local grain price and the CBOT price is known as “basis”. Understanding how basis works and the seasonal trends associated with basis can be an important factor in making corn and soybean marketing decisions.
More specifically, “basis” is the difference between the local grain price quote on a specific date and the CBOT price for the corresponding futures contract month. Local harvest price quotes for corn and soybeans would correspond to the December CBOT corn futures price and the November CBOT soybean futures price. By comparison, storing the corn or soybeans after harvest and selling the grain via a forward contract in June or early July the following Summer would have the basis level determined by the July CBOT corn or soybean futures.
A “narrow” or “tighter” basis means that the local corn or soybean price is nearer or getting closer to the corresponding CBOT price, while a “wide” or “widening” basis reflects local grain prices that have a greater margin below the CBOT prices. In most instances, farmers in the Upper Midwest deal with “negative” basis levels, which means than local corn and soybean prices are lower than the corresponding CBOT prices. Areas near the Mississippi River ports or in the Southern U.S more typically have “positive” basis levels, where local grain prices are actually higher than CBOT prices. However, there have been several areas of the Upper Midwest that had “positive” basis levels for corn and soybeans at certain times from 2021 until 2023.
While the definition of basis may seem quite simple, having a good understanding of basis can be quite complex. Basis can be highly variable at different locations in a region on any given day and can vary throughout the year, or suddenly be adjusted due to changing dynamics in grain market fundamentals. Following are the main factors that affect basis and can lead to changes in basis levels:
· Geographic Variations - Corn and soybean basis can vary greatly from location-to-location, largely dependent on the amount of the local grain production to be used as livestock feed or for use in processing and ethanol production. Therefore, basis levels tend to be wider in Western Minnesota and the Dakota’s than in Southern Minnesota and Iowa, which have a high amount of livestock production, as well as several ethanol plants and soybean processing plants.
· Transportation Costs -This is the cost of shipping grain from the point of local sale to the final destination point, whether it be for use within the U.S. or transported to the ports to be shipped for exports to other countries. For example, areas that utilize a large percentage of the corn and soybean production in the local area have less grain to be transported to the ports or to other portions of the U.S. In addition, being closer to the Mississippi River, an important port, or a major rail line tends to reduce transportation costs and result in tighter basis levels.
· Supply and Demand - The overall U.S. grain supply, based on crop production in a given year and grain carryover levels from the previous year, along with the grain usage for livestock feed, processing, ethanol production, and exports, can result in year-to-year variations in basis levels. For example, the 2021 and 2022 corn and soybean basis levels in many areas were tighter than normal due to the strong demand for exports to China and increased domestic demand for livestock feed and processing. However, with increases in and corn and soybean acreage, along with projected reduced demand and export levels, basis levels widened out to more typical “harvest-time” basis levels by the Fall of 2023. This trend has continued in many areas in 2024. Poor crop yields in a local area can also affect the local basis level in a given year, which could occur following the 2024 harvest season in portions of Southern Minnesota and Iowa.
· Storage and Interest Costs - In a normal year, both CBOT corn and soybean futures prices and cash prices tend to be the lowest at harvest time and then increase by the summer months in the following year. As the time gets closer to the actual date of delivery for the grain, the storage and interest costs typically decrease, and the basis tends to narrow; however, this does not always occur. At any time during the year, depending on local demand, cash grain prices may be relatively strong compared to the CBOT prices, which may result in tighter basis levels. This was the case in 2021 and 2022, when a combination of lower-than-average crop yields, together with strong demand for corn and soybeans, kept basis levels fairly tight throughout the year in many portions of the Upper Midwest. However, this scenario has been much different in the second half of 2023 and for most of 2024 when the U.S. has had larger production levels.
There are many grain marketing tools available for farm operators to utilize in addition to cash sales, including a variety of hedging, options, and basis contracts. Generally, a hedging or options contract locks in the CBOT futures price, but not the cash price, meaning that the farmer still has basis risk. For example, a “hedge-to-arrive” contract locks in a CBOT futures price but does not finalize the basis until the futures contract is cleared and the grain is actually sold at the local level. By comparison, a “basis contract” locks in the basis but keeps the final price open depending on changes in the corresponding CBOT futures price at the time of delivery or setting the final price.
The current 2024 basis levels for corn and soybeans in Southern Minnesota have been more typical of “harvest-time” basis levels that existed prior to 2021 and 2022. Recent harvest-time corn basis levels in the Upper Midwest ranged from about $.20 to $.50 per bushel under the CBOT December corn futures price. Soybean basis levels ranged from about $.40 to $.80 per bushel under the CBOT price, with tighter basis levels at soybean processing plants. As mentioned earlier, since the last half of 2023, harvest basis levels for corn and soybeans in the Upper Midwest have resembled the more typical of basis levels that existed from 2015-2020 than the basis levels from 2021 to early 2023. During 2015-2020, the local corn basis level in Southern Minnesota improved in three years and widened in three years by the following June. Soybean basis levels improved in five of the six years during those years, with an average improvement of less than $.10 per bushel.
The return to wider “harvest-time” basis levels for corn and soybeans during harvest season in the past couple of years is certainly something to factor into post-harvest grain marketing decisions in the next few months. If corn and soybean futures prices rally after harvest season and basis levels remain quite wide, it will likely encourage the use of more “hedge-to-arrive” contracts for the summer months of 2025. This will allow producers to reduce their “price risk” on the stored grain, while still being able to take advantage of potential basis improvement that may occur between the post-harvest months and the Summer of 2025. On the other hand, if localized basis levels tighten for a short-term period of time after harvest due to reduced 2024 crop yields and strong local demand, it may be a time to use a “basis contract” to lock-in the basis level. This will allow a producer to take advantage of the tighter basis levels and still have some upside potential in the corn or soybean market into next Spring.
Most grain marketing strategies, including storing unpriced grain in a bin on the farm, involve some level of price and/or basis risk. Understanding the dynamics of basis in corn and soybean market prices is a key element in analyzing the various types of grain marketing contracts that are available to farm operators. Many grain marketing advisors do a very good job of explaining the dynamics of basis and how that interacts with grain marketing strategies. Iowa State University has some good information available on understanding basis and explaining various grain marketing strategies. This information is available on the “Ag Decision Maker” website at: https://www.extension.iastate.edu/agdm/cdmarkets.html.
Note - For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Phone - (507) 381-7960; E-mail - [email protected]