Reality speaks - 8/29/2024 20:04

I would suggest that most do not want to look because of how terrifying it might look.

I know this: in 2022 all operations made money and a lot of it (accrual based earnings)

in 2023 60% of the operations lost money (Accrual Based earnings) and this includes everyone's favorite Unicorn that everyone thinks that every farming operation buying ground is. That operation that only farms owned land with no land debt or machinery debt. Yes in 2023 even they lost money. But they can afford to lose money for the next 10+ years before the banker gets concerned.

The projections for 2024 using normal yields and $4.50 for corn and $11.50 for soybeans and those projections were barely positive in earning and repayment ability for most operations. So lets fast forward and assume an extra 30 bu of corn so 230 bu corn vs 200 bu corn. Sold only 25% of the 200 bu at $4.25-$4.50 for an average of $4.30 on 50bu or $215, add in 180 bu unsold at $3.60/bu = $650/ac for a gross of $815/ac vs the projection of $900/ac

Soybeans same deal assume normal yield of 60bu/ac @$11.50 or $690/ac now fast forward sold 33% at $11/bu or 20 bu @ $11/bu or $220/ac Raise 67 bu/ac so still have 47 bu to sell at current market of $9.50 or $450/ac for gross of $670/ac.

being in a heavy corn vs soybean area means that the fiscal performance is going to be worse than expected for many operation and that BTO that needed $5/bu on corn and $13/bu on soybeans to barely break even on the cash flow is in real trouble.

those that survive came into this down turn with working capital and did not spend all of it on new paint just to avoid paying some income taxes, They have their costs under control Operating rate under 75% and they did not expand their term debt payments in 2022-2023 thinking that $6/bu corn was here to stay.