Weak crop prices have been felt in farmland and machinery sales
WEAK crop prices have affected the entire US agricultural economy.
Ernie Goss, chairman of Regional Economics at Creighton University, said low crop and cattle prices were weighing across the whole industry.
Farm prices have fallen by 11 per cent in past year, with cattle prices down 22 per cent and grains down 20 per cent.
The Goss farmland price index has remained below growth neutral for the past 33 months.
Rural bankers forecasted farmland prices would fall 6.9 per cent further over the next 12 months.
But Dr Goss highlighted a ’great deal of variation’ across the country in farmland prices.
The August equipment sales index increased slightly but low farm incomes were also restraining the agricultural equipment sales.
Dr Goss said: "Weak agricultural commodity prices are pushing farm income lower and sinking the overall Rural Mainstreet economy."
USDA has upgraded yield projections for wheat and forecast record US soybean and corn crops.
David Sheppard, managing director at Gleadell, said: "Long-term, if the USDA forecast is confirmed, the US will need to find additional demand for some 15-20 million tonnes of coarse grains.
"That may provide a major challenge in an environment of record global supplies."
However, Mr Sheppard said the market seemed to think the USDA had overestimated yields.
The weaker dollar has also helped consolidate prices.
In Europe, there were concerns about German wheat production on top of a smaller, lower quality French crop which means EU production has decreased but crops from the Black Sea region have increased.
The UK may also have increased export opportunities.
Mr Sheppard added: “Early quality concerns have, to some extent, been eased as the harvest gathers pace, although final yields will be short of last season’s record.”
Mr Sheppard estimated the wheat crop would be down by two million tonnes on last year.