Mizzou’s FAPRI notes separate path for grain and beef producers
A tale of two farm sectors—low crop prices with higher input costs and record prices for much of the cattle sector—is likely to continue.
That is the assessment of the Food and Agricultural Policy Research Institute at the University of Missouri, whose report is known for its long-term accuracy on the farm economy.
Robert Maltsbarger, a senior economist with FAPRI, said a team of economists examines many sectors that make up the farm economy and averages 500 realistic scenarios.
The near-term outlook for farm finances shows distinct differences between crop and livestock sectors, the report notes. Net returns remain poor for most row crops as input prices remain elevated, and crop prices have moderated.
“After crops declined from the 2022 highs, input prices also declined, but at a much slower pace,” Maltsbarger said. “This has led to a tightening of net market returns for crops.”
Each farm faces different yields and capital costs. A number of farms are facing returns below break-even without government payments and insurance assistance, he said.
The corn price is projected to be $4.09 per bushel in 2025-2026; $4.21 per bushel in 2026-2027; and $4.20 per bushel from 2027-2028 to 2035-2036. Soybeans for the same time frames were estimated at $10.21, $10.39, and $10.40 per bushel. Wheat was estimated at $4.90, $5.58, and $5.56 per bushel. Upland cotton prices were estimated at 61.7, 63.8, and 69.7 cents per pound.
The FAPRI report notes agriculture risk coverage and price loss coverage will be important through 2035 and that corn, soybean, wheat and cotton producers will likely choose PLC as their preferred risk management tool. Over the next 10 years, PLC payments are expected to average about $31 per base acre as the farm price remains below the effective reference price that was increased by the One Big Beautiful Bill Act.
While the nation’s farmers will have solid balance sheets, with farm assets above $4.4 trillion, they will likely continue to see debt increase and their debt-to-asset ratio rise from 13.5% in 2025 to 14.3% from 2027 to 2035. The report noted weaker demand for farmland, and added debt could become a long-term concern for farm finances.
Net farm income, which was above $152 billion in 2025 and 2026, is expected to fall to $119.6 billion from 2027 to 2035.
A shining sector
The U.S. consumer has shown resiliency in eating beef, Maltsbarger said, and that is reflected in the report.
“Despite beef consumer prices rising, our per capita consumption of beef has remained nearly flat in 2025,” he said. “It remains near flat again in 2026 before beginning to rise again in 2027 as cattle prices start their retreat. It seems there has been a shift more strongly from the preference of beef that outstrips the traditional relationship to prices. I think in large part the beef cow-calf returns have been supported by the U.S. population’s willingness to continue to buy beef irrespective of the prices and competitiveness of other proteins at the counter.”
The cattle market is experiencing record prices and returns to cow-calf producers. Policy uncertainty remains.
The report assumes the beef herd will start to rebuild in 2026, with numbers beginning to show in the January 2027 cattle inventory report.
Maltsbarger said that comes with a caveat.
“As we assume normal, or average, weather in our projections, in addition to trend yields, this assumes good pasture conditions and hay production,” he said. “After dryness the last few summers and autumns, anecdotally, many cow-calf farmers needed to start feeding hay early.”
With record cow-calf returns and limited late-season forage, there has been an economic incentive for ranchers to sell heifers and retain only enough for replacements, he said. With more favorable weather and improved forage conditions, it could help with herd rebuilding in the Northern and Southern Plains.
If a shift to El Niño occurs in the summer and fall in those Plains states, it could boost the rebuild.
A time of uncertainty
The report, issued in March, did not consider the Iran war, which has affected energy and fertilizer prices and added uncertainty, but it is on Maltsbarger’s mind. Media reports and a survey by North Dakota State University indicated a sizable number of farmers likely prepurchased fertilizer they would apply on corn, for example.
“The key point going forward is that the duration of the conflict may be more impactful on 2027 planting in the U.S., as input prices have a tendency to be sticky on the way back down,” Maltsbarger said. “This means the longer there are disruptions in global trade and/or production of fertilizer inputs, it could take time before prices retreat. If prices remain elevated beyond what they were in January into the fall and winter, we may see it reflected in fall nitrogen application behavior, which could mean fewer corn acres planted in 2027.”
The report notes net farm income fell by one-third between 2022 and 2024 as a drop in crop returns outweighed the effects of stronger cattle prices. Supported by higher government payments, farm income in 2025 and 2026 is expected to be above the average of the prior decade.
Takeaways
• Grain and oilseed prices are expected to rebound modestly in 2026, having fallen from their peaks in 2021-2022 and 2022-2023. Corn, soybeans and wheat prices remain below their average of the past decade.
• Corn prices are projected to average $4.21 per bushel for the crop harvested in 2026. Soybean prices were projected at $10.39 per bushel and wheat prices rebounding from $4.90 the prior year to $5.58 per bushel in 2026-2027.
• FAPRI also noted prices for cotton, rice, sorghum and many other crops have declined sharply from recent peaks and have shown modest increases, but margins also remain poor.
• The beef cow herd continued to decline through January 2026 and, along with suspended live animal trade with Mexico and robust demand, has resulted in record cow-calf operator profitability, the report stated. Maltsbarger said the FAPRI report does not include an assumption of resolution for the New World screwworm, which limits live cattle trade.
With a smaller beef herd, this keeps pressure on ranchers to rebuild the herd to increase U.S. beef production, he said, adding it comes at a time when feeder and fed cattle prices are expected to peak this year.
“As we have the turn in the cattle cycle beginning this year, this allows a larger January 2027 inventory number and leads to the slow process of inventories rising and domestic cattle prices easing after 2026, reflected in our livestock receipts declining in 2027.”
He also noted slow receipt growth projected in other livestock sectors.
The report points out profitability eventually causes the cycle to turn, and cattle prices could start to decline in 2027. FAPRI also notes lower feed costs have supported livestock profitability.
Provisions of the One Big Beautiful Bill Act increase Commodity Credit Corporation, Natural Resources Conservation Service and crop insurance government outlays. Section 5 of the CCC transfer and subsequent expenditures are assumed to continue in the current policy baseline, with total mandatory outlays in the outlook at similar levels of expenditures since fiscal year 2019.
During a presentation to congressional agriculture committees, Maltsbarger said testimony highlighted that a ramp-up in cattle inventory will ease prices and combined with relatively stagnant crop projections, means that when excluding potential government payments, net farm income will continue to recede.
“We understand that in the next 10 years there will possibly be a weather disruption somewhere in the world and/or a policy shock either foreign or domestic that may drive the markets beyond the means, but without those disruptions net farm income will see a retreat similar to pre-2020 levels.”
Grain producers did get a dose of good news when the Environmental Protection Agency increased E15 voluntary blends, and Maltsbarger said colleagues involved in the study noted that despite an increase in blending rates, it is combined with an assumption of increasing fuel efficiency that leads to motor gasoline use declining in the long term.
The report notes oilseeds will continue to be an important market, particularly for soybean farmers.
Dave Bergmeier can be reached at 620-227-1822 or [email protected].
