Over the past few years, economic conditions in some segments of US agriculture have deteriorated, raising questions about the longer-term trajectory of the sector and the viability of many farms throughout the country.
However, a Federal Reserve Bank bulletin said, the severity of current public narratives surrounding US agriculture diverges from the signals apparent in underlying data.
FARMERS BALANCE RISKS, CHALLENGES
US farmers balance myriad risks and challenges, some of which have intensified in recent years. Said Nate Kauffman and Ty Kreitman, Kansas City Federal Reserve Bank economists and authors of the bulletin.
However, underlying data show that, in aggregate, the sector has remained resilient, and severe financial pressure has been limited, Kauffman and Kreitman said. Low crop prices and high costs have been primary factors in the weakness in US agriculture.
Since 2022, prices for corn and soybeans have decreased by roughly 40% and 30%, respectively, while cotton and wheat each dropped 45%, the economists said. At the same time, expenses rose: From 2019 to 2022, total production costs in US agriculture increased by 25%; since 2022, these costs have increased by an additional 10%.
The combination of lower crop prices and persistently high production costs has led to sharply lower profit margins for most producers, they said.
TARIFFS REALITY
Although the tariff environment of the past year has often been cited as a leading cause of low prices in agricultural commodities, the economic reality is more complex, the bulletin said. Following announcements of tariffs last year, China—a critical soybean trading partner in recent years—sharply curtailed purchases of US soybeans.
But, despite reduced exports, the price of soybeans has remained higher than at the beginning of 2025, the Bank said. Soybeans are a globally traded commodity, and markets adjust to shifting trade flows.
For example, when China sources more soybeans from Brazil, prices respond across regions and the commodity is redirected to alternative export markets and domestic end-uses, the bulletin said. Since 2023, domestic consumption of US soybeans has increased by more than 15%, supported by strong demand for renewable diesel and soybean oil.
The decline in soybean prices since 2022 more likely was the result of strong production in South America and the US than the tariff environment that began in 2025, the economists said. More recently, conflict in the Middle East led to a surge in the cost of fuel and fertilizer, but the effects on crop producers have thus far been small in aggregate.
HISTORICAL PERSPECTIVE
Historically, 40% of global urea production, a nitrogen-based fertilizer, has transited through the Strait of Hormuz. With the strait effectively closed, the price of urea increased nearly 70%, the Bank said. In addition, the price of diesel fuel, necessary for fieldwork and farm operations, also increased by about 70% since February.
Nevertheless, the near-term effects on profit margins have been relatively small, the economists said. In February, the projected per-bushel profit margin for an average US corn producer in 2026 was about a minus $0.07.
Accounting for the increase in fertilizer and fuel prices as of late April put the average projected profit margin at about minus $0.12, recognizing that crop prices have also increased since February, they said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $257.73 per cwt to $260.37, compared with last week’s range of $256.34 to $262.23 per cwt. FOB dressed steers and heifers went for $403.56 per cwt to $405.91, compared with $403.95 to $409.71.
The USDA choice cutout Tuesday was up $0.70 per cwt at $392.90 while select was down $1.16 at $376.16. The choice/select spread widened to $15.97, from $14.11 with 128 loads of fabricated product and 10 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $463.01 per cwt, and 50% beef was $198.42.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.20 to $1.45 a bushel over the Jul corn contract, which settled at $4.19 1/2 a bushel, up $0.00 3/4.
No live cattle contracts were tendered for delivery Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $368.20 per cwt, up $1.19. This compares with Tuesday’s Aug contract settlement of $354.15, up $3.45.