Episode Number
10401
Episode Show Notes / Description
The July 28, 2026, special edition of the Closing Market Report features an economic outlook for Midwestern row crop farmers presented by University of Illinois agricultural economist Gary Schnitkey. Schnitkey highlights a sustained cost-price squeeze resulting from commodity prices returning to long-run plateaus while input costs remain elevated following their 2022 peaks. This dynamic is projected to cause negative per-acre returns for the 2026 crop year, though ad hoc government payments continue to buffer overall financial losses. Looking ahead to 2027, Schnitkey warns that the ongoing conflict in Iran will likely exacerbate these financial pressures by driving up critical input costs, particularly for diesel fuel and fertilizer.
Transcript
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The July 28, 2026, special edition of the Closing Market Report features an economic outlook for Midwestern row crop farmers presented by University of Illinois agricultural economist Gary Schnitkey. Schnitkey highlights a sustained cost-price squeeze resulting from commodity prices returning to long-run plateaus while input costs remain elevated following their 2022 peaks. This dynamic is projected to cause negative per-acre returns for the 2026 crop year, though ad hoc government payments continue to buffer overall financial losses. Looking ahead to 2027, Schnitkey warns that the ongoing conflict in Iran will likely exacerbate these financial pressures by driving up critical input costs, particularly for diesel fuel and fertilizer.
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Todd Gleason: From the Land Grant University in Urbana-Champaign, Illinois, this is the Closing Market Report for the 28th day of July 2026. I’m Illinois Extension’s Todd Gleason. Coming up, a special edition of our program. We’ll hear excerpts of a presentation Gary Schnitkey, agricultural economist at the University of Illinois, made to the Farm Legacy attendees in northern Illinois at the end of the month. He’ll put profits and losses on the farms into an historical context, and then turn his attention to the Iran conflict and the impact it has been having on agriculture—particularly row crop farms across the state of Illinois and, for that matter, throughout the Midwest. You’ll want to stay with us for this Tuesday edition of the Closing Market Report from Illinois Public Media. It is public radio for the farming world, online on demand at WILLAg.org. That’s WILLAg.org.
announce: Todd Gleason services are made available to WILL by University of Illinois Extension.
Todd Gleason: University of Illinois agricultural economist Gary Schnitkey in June made a presentation outlining three driving forces in row crop, corn, and soybean agriculture. During it, he put the war in Iran into context of its probable impacts on agriculture and laid out how he sees money flow from the federal government into the heartland impacting cash rents. Before all of that, he started with a short history of prices. He put a chart on the screen and picked up with the development of the ethanol industry.
Gary Schnitkey: I’m going to start here with just where prices have been. You’re looking at a chart of corn and soybean prices. These go back to 1990, and these are national cash prices. Illinois prices are pretty close to these, sometimes a little bit higher in northern Illinois, so that will give you a feel for where those prices are. I’m going to point out several things on this chart. The one thing that is worth pointing out is that in 2006, we had a major move up in prices. Before 2006, we averaged $2.40 on corn and $6.00 on soybeans. Since 2006, we’ve averaged $4.46 on corn and $10.68 on soybeans. That break happened because of ethanol. The ethanol build began roughly in 2006; it largely ended by 2012, and it resulted in significantly higher corn prices. Soybean prices also increased because soybeans compete with corn for land, so we saw both of those go up. Pretty much all commodity markets—corn and soybeans, oil, etc.—work where you have these long-run plateaus. We are in one which is roughly $4.40 for corn and $10.60 for soybeans. That plateau before 2006 was $2.40 for corn and $6.00 for soybeans, and that lasted from 1973 or 1974 on, with the Russian grain deal being the spark that caused us to go up there. Before that, we were sitting at $1.60 corn; if you remember that, you are officially old. But since 2006, we’ve averaged $4.50 for corn and $10.68 for soybeans, and we don’t see that changing. We’ll have periods above that price, such as happened in 2012 with the drought here in the Midwest, which caused a price increase. We had a supply response. Then in 2022, another price increase was caused by the Ukraine-Russia war. To see prices get up above this long-run plateau again, we have to either have a drought here or someplace else, or a war. We do have a war now in the Middle East. The Middle East is not a big exporter of grain like Ukraine is, so we’re not seeing a price response to that. Right now, we’re looking at prices coming down from the 2022 levels. Currently, USDA is projecting $4.40 for 2026 grain that was produced in 2026 and will be marketed in that year. Soybeans are at $11.20, so there is a bit more optimism for prices coming into 2026. If you look out at 2027, they’re roughly repeats of this period right here. So, we are at or near our long-run plateaus. We had that price increase in 2022 come down, and now we’re at that long-run plateau.
Todd Gleason: USDA’s season’s average cash price predictions, by the way, for corn and soybeans were at and still remain near that plateau’s midpoints. USDA will update those figures in August. Again, we’re listening to an economic outlook presentation made in June by Gary Schnitkey from the University of Illinois.
Gary Schnitkey: Unfortunately, what hasn’t come back down are costs. Let me point out, here is our 2012 price increase, and here is our 2022 price increase. Throughout the 2012 period, we saw rising costs alongside rising prices, hitting a plateau in 2014. Prices came down, but costs did not go down as much as they went up. Similarly, in 2022, with about a year lag, we saw prices go up, but costs definitely haven’t come down to pre–2022 levels. What we have going on now is a cost-price squeeze. We’ve seen prices come down but costs have not, which puts us in a position where we have low and often negative incomes, particularly on cash-rented farmland. From the farmer’s perspective, since 2023, cash rent was $315, an all-time high in northern Illinois. That has come down some to $293, but it’s still higher than it was before. We’re still looking at high costs; previously at $997 for a 50–50 corn-soybean rotation, and now we’re looking at $924.
Todd Gleason: Those last two numbers are per-acre production costs, or how much money a farmer has in a crop. Put another way, a northern Illinois farmer’s break-even income on a 50–50 cash-rented corn-soybean operation is $924 an acre. That requires a higher price per bushel when the farmer sells the crop.
Gary Schnitkey: Given these high costs and prices that have come down, it’s interesting to note these break-even prices. Here in northern Illinois, we see the break-even levels for 2025 at $4.53 and 2026 at $4.66. We actually saw a cost increase going into 2026, led primarily by fertilizer. In 2025, we had an $11.12 break-even for soybeans, and now that’s at $10.93. If you look at where prices are, they’re pretty close to those break-even levels. Corn is at $4.40, which is below the corn break-even. Soybeans at $10.93 is below the $11.20 projected for 2026, but it’s still not a large level of return. What has been making up the difference is government payments. Even though we’ve seen this cost-price squeeze, we aren’t feeling it as much as we would have without those payments. I put these government payments here on a per-acre basis. In 2024, we got about a $5 payment in Illinois for ARC and PLC, distributed sporadically across counties. The $36 was the ad hoc payment, the ECAP payment for that year. In 2025, we’re looking at $45 of ARC-PLC payments. We have not gotten those yet; they will come in October. We’re still waiting for the final market year average price to nail down that level, but it’s likely in that $45 range. The $38 was the Farmer Bridge Assistance Payment received for the 2025 crop. It occurred in 2026 but is associated with the acres planted in 2025. Given those totals, you’re looking at $80 in government payments for 2025, and that’s a big deal. As Jonathan mentioned, there is discussion of another ad hoc program. Legislation authorizing $11 billion in payments for the Iran War did not pass, but there’s still significant discussion of another payment, whether associated with the 2025 or 2026 crop. For the 2026 crop, we are projecting $40 in ad hoc payments, which would be obtained in October 2027. We’ve actually had more ad hoc payments than ARC-PLC payments recently, going back to the MFP payments in 2018 and 2019, and the CFAP payments in 2020.
Todd Gleason: Jonathan, by the way, is Schnitkey’s FarmDoc colleague at the University of Illinois, Jonathan Coppess. He specializes in analyzing farm policy.
Gary Schnitkey: Combining all of those, this is the farmer return on a 50–50 corn-soybean rotation for cash rent farmland in northern Illinois. 2020, 2021, and 2022 were very good years. In 2022 in particular, the Ukraine-Russia war caused prices to spike, and farmers had returns between $253 and $267. Since then, on cash rent farmland, we’ve had a minus $45 return in 2023. In 2024, we had a $27 return, which would have been negative without those ad hoc payments. For 2025, we have a projection of $21 per acre. While positive and better than 2023 and 2024, it’s still below the long-term average of $90 an acre. Right now, we’re projecting minus $20 for 2026.
Todd Gleason: I’m going to benchmark average income per acre here, and this is not a number produced by the ag economist, but one generally thought of as a rule of thumb, and it has held as ground truth for decades: farmers clear about $100 an acre. This tells you everything you need to know about why the average size of a row crop farm continues to increase. I’ll go a step further to say why it is incumbent upon landowners to take measures to reinvest in the farm and protect its productivity. Now, let’s pick up with that 2026 $20 per acre projected loss from Gary Schnitkey.
Gary Schnitkey: It will remain to be seen how that plays out. This projection only includes $40 of ARC and PLC payments. If there’s another ad hoc disaster assistance payment or we have higher yields, we would expect that to go higher. Overall, our farmers are in a pretty strong financial position based on FBFM data. The debt-to-asset ratio is still very low. We continue to increase debt per acre, and recently, interest payments have increased because interest rates have gone up and farmers are handling more debt. This is primarily due to the higher operating notes needed for the higher cost levels. To summarize, we are in a challenging time with low returns caused by a cost-price squeeze. Prices are down from the 2022 highs, and costs have not declined as much; right now, we’re looking at cost increases for 2027. ARC, PLC, and crop insurance coverage are important but leave gaps that ad hoc federal payments have filled. The negative side is that these payments have likely slowed cost adjustments, keeping cash rents and input prices from coming down. Moving forward, we are watching the Iran conflict and demand growth. To summarize: 2025 returns were an improvement from 2023 and 2024, but it was still a tough year, particularly for farms with poor yields. For 2026, we expect weaker returns again; prices have increased slightly, but costs remain high. 2027 is the bigger concern because we expect a large cost increase associated with the Iran conflict, including higher fuel and fertilizer prices, general inflation, and higher energy prices. Looking at oil prices since the Iran conflict began, we saw a 45% increase, and they remain elevated. Diesel fuel prices have similarly increased. Farmers were more exposed to fuel cost increases for 2026, which will heavily impact harvest and going into 2027. Fertilizer prices have also spiked. Anhydrous ammonia and urea have increased dramatically with no sign of coming down, so ammonia prices over $1,000 should be expected this fall. DAP and MAP are also a big concern, as they require sulfur, which is exported from crude oil production in the Middle East. Supplies have been tight.
Todd Gleason: Those fuel and fertilizer concerns will flow right from the 2026 growing season into 2027. You’ve been listening to an excerpt of a presentation agricultural economist Gary Schnitkey made during the month of June. As of last week, USDA’s Illinois NASS office puts the state average at $1,022 per ton. You’ve been listening to the Closing Market Report from Illinois Public Media on this 28th day of July 2026. I’m Extension’s Todd Gleason. Thank you for being with us. Don’t forget to visit our website. The address is WILLAg.org. That’s WILLAg.org, and there you’ll find the latest opinions not only of Gary Schnitkey, but of his colleagues as well, along with the animal scientists and the crop scientists at the U of I.
The July 28, 2026, special edition of the Closing Market Report features an economic outlook for Midwestern row crop farmers presented by University of Illinois agricultural economist Gary Schnitkey. Schnitkey highlights a sustained cost-price squeeze resulting from commodity prices returning to long-run plateaus while input costs remain elevated following their 2022 peaks. This dynamic is projected to cause negative per-acre returns for the 2026 crop year, though ad hoc government payments continue to buffer overall financial losses. Looking ahead to 2027, Schnitkey warns that the ongoing conflict in Iran will likely exacerbate these financial pressures by driving up critical input costs, particularly for diesel fuel and fertilizer.
---
Todd Gleason: From the Land Grant University in Urbana-Champaign, Illinois, this is the Closing Market Report for the 28th day of July 2026. I’m Illinois Extension’s Todd Gleason. Coming up, a special edition of our program. We’ll hear excerpts of a presentation Gary Schnitkey, agricultural economist at the University of Illinois, made to the Farm Legacy attendees in northern Illinois at the end of the month. He’ll put profits and losses on the farms into an historical context, and then turn his attention to the Iran conflict and the impact it has been having on agriculture—particularly row crop farms across the state of Illinois and, for that matter, throughout the Midwest. You’ll want to stay with us for this Tuesday edition of the Closing Market Report from Illinois Public Media. It is public radio for the farming world, online on demand at WILLAg.org. That’s WILLAg.org.
announce: Todd Gleason services are made available to WILL by University of Illinois Extension.
Todd Gleason: University of Illinois agricultural economist Gary Schnitkey in June made a presentation outlining three driving forces in row crop, corn, and soybean agriculture. During it, he put the war in Iran into context of its probable impacts on agriculture and laid out how he sees money flow from the federal government into the heartland impacting cash rents. Before all of that, he started with a short history of prices. He put a chart on the screen and picked up with the development of the ethanol industry.
Gary Schnitkey: I’m going to start here with just where prices have been. You’re looking at a chart of corn and soybean prices. These go back to 1990, and these are national cash prices. Illinois prices are pretty close to these, sometimes a little bit higher in northern Illinois, so that will give you a feel for where those prices are. I’m going to point out several things on this chart. The one thing that is worth pointing out is that in 2006, we had a major move up in prices. Before 2006, we averaged $2.40 on corn and $6.00 on soybeans. Since 2006, we’ve averaged $4.46 on corn and $10.68 on soybeans. That break happened because of ethanol. The ethanol build began roughly in 2006; it largely ended by 2012, and it resulted in significantly higher corn prices. Soybean prices also increased because soybeans compete with corn for land, so we saw both of those go up. Pretty much all commodity markets—corn and soybeans, oil, etc.—work where you have these long-run plateaus. We are in one which is roughly $4.40 for corn and $10.60 for soybeans. That plateau before 2006 was $2.40 for corn and $6.00 for soybeans, and that lasted from 1973 or 1974 on, with the Russian grain deal being the spark that caused us to go up there. Before that, we were sitting at $1.60 corn; if you remember that, you are officially old. But since 2006, we’ve averaged $4.50 for corn and $10.68 for soybeans, and we don’t see that changing. We’ll have periods above that price, such as happened in 2012 with the drought here in the Midwest, which caused a price increase. We had a supply response. Then in 2022, another price increase was caused by the Ukraine-Russia war. To see prices get up above this long-run plateau again, we have to either have a drought here or someplace else, or a war. We do have a war now in the Middle East. The Middle East is not a big exporter of grain like Ukraine is, so we’re not seeing a price response to that. Right now, we’re looking at prices coming down from the 2022 levels. Currently, USDA is projecting $4.40 for 2026 grain that was produced in 2026 and will be marketed in that year. Soybeans are at $11.20, so there is a bit more optimism for prices coming into 2026. If you look out at 2027, they’re roughly repeats of this period right here. So, we are at or near our long-run plateaus. We had that price increase in 2022 come down, and now we’re at that long-run plateau.
Todd Gleason: USDA’s season’s average cash price predictions, by the way, for corn and soybeans were at and still remain near that plateau’s midpoints. USDA will update those figures in August. Again, we’re listening to an economic outlook presentation made in June by Gary Schnitkey from the University of Illinois.
Gary Schnitkey: Unfortunately, what hasn’t come back down are costs. Let me point out, here is our 2012 price increase, and here is our 2022 price increase. Throughout the 2012 period, we saw rising costs alongside rising prices, hitting a plateau in 2014. Prices came down, but costs did not go down as much as they went up. Similarly, in 2022, with about a year lag, we saw prices go up, but costs definitely haven’t come down to pre–2022 levels. What we have going on now is a cost-price squeeze. We’ve seen prices come down but costs have not, which puts us in a position where we have low and often negative incomes, particularly on cash-rented farmland. From the farmer’s perspective, since 2023, cash rent was $315, an all-time high in northern Illinois. That has come down some to $293, but it’s still higher than it was before. We’re still looking at high costs; previously at $997 for a 50–50 corn-soybean rotation, and now we’re looking at $924.
Todd Gleason: Those last two numbers are per-acre production costs, or how much money a farmer has in a crop. Put another way, a northern Illinois farmer’s break-even income on a 50–50 cash-rented corn-soybean operation is $924 an acre. That requires a higher price per bushel when the farmer sells the crop.
Gary Schnitkey: Given these high costs and prices that have come down, it’s interesting to note these break-even prices. Here in northern Illinois, we see the break-even levels for 2025 at $4.53 and 2026 at $4.66. We actually saw a cost increase going into 2026, led primarily by fertilizer. In 2025, we had an $11.12 break-even for soybeans, and now that’s at $10.93. If you look at where prices are, they’re pretty close to those break-even levels. Corn is at $4.40, which is below the corn break-even. Soybeans at $10.93 is below the $11.20 projected for 2026, but it’s still not a large level of return. What has been making up the difference is government payments. Even though we’ve seen this cost-price squeeze, we aren’t feeling it as much as we would have without those payments. I put these government payments here on a per-acre basis. In 2024, we got about a $5 payment in Illinois for ARC and PLC, distributed sporadically across counties. The $36 was the ad hoc payment, the ECAP payment for that year. In 2025, we’re looking at $45 of ARC-PLC payments. We have not gotten those yet; they will come in October. We’re still waiting for the final market year average price to nail down that level, but it’s likely in that $45 range. The $38 was the Farmer Bridge Assistance Payment received for the 2025 crop. It occurred in 2026 but is associated with the acres planted in 2025. Given those totals, you’re looking at $80 in government payments for 2025, and that’s a big deal. As Jonathan mentioned, there is discussion of another ad hoc program. Legislation authorizing $11 billion in payments for the Iran War did not pass, but there’s still significant discussion of another payment, whether associated with the 2025 or 2026 crop. For the 2026 crop, we are projecting $40 in ad hoc payments, which would be obtained in October 2027. We’ve actually had more ad hoc payments than ARC-PLC payments recently, going back to the MFP payments in 2018 and 2019, and the CFAP payments in 2020.
Todd Gleason: Jonathan, by the way, is Schnitkey’s FarmDoc colleague at the University of Illinois, Jonathan Coppess. He specializes in analyzing farm policy.
Gary Schnitkey: Combining all of those, this is the farmer return on a 50–50 corn-soybean rotation for cash rent farmland in northern Illinois. 2020, 2021, and 2022 were very good years. In 2022 in particular, the Ukraine-Russia war caused prices to spike, and farmers had returns between $253 and $267. Since then, on cash rent farmland, we’ve had a minus $45 return in 2023. In 2024, we had a $27 return, which would have been negative without those ad hoc payments. For 2025, we have a projection of $21 per acre. While positive and better than 2023 and 2024, it’s still below the long-term average of $90 an acre. Right now, we’re projecting minus $20 for 2026.
Todd Gleason: I’m going to benchmark average income per acre here, and this is not a number produced by the ag economist, but one generally thought of as a rule of thumb, and it has held as ground truth for decades: farmers clear about $100 an acre. This tells you everything you need to know about why the average size of a row crop farm continues to increase. I’ll go a step further to say why it is incumbent upon landowners to take measures to reinvest in the farm and protect its productivity. Now, let’s pick up with that 2026 $20 per acre projected loss from Gary Schnitkey.
Gary Schnitkey: It will remain to be seen how that plays out. This projection only includes $40 of ARC and PLC payments. If there’s another ad hoc disaster assistance payment or we have higher yields, we would expect that to go higher. Overall, our farmers are in a pretty strong financial position based on FBFM data. The debt-to-asset ratio is still very low. We continue to increase debt per acre, and recently, interest payments have increased because interest rates have gone up and farmers are handling more debt. This is primarily due to the higher operating notes needed for the higher cost levels. To summarize, we are in a challenging time with low returns caused by a cost-price squeeze. Prices are down from the 2022 highs, and costs have not declined as much; right now, we’re looking at cost increases for 2027. ARC, PLC, and crop insurance coverage are important but leave gaps that ad hoc federal payments have filled. The negative side is that these payments have likely slowed cost adjustments, keeping cash rents and input prices from coming down. Moving forward, we are watching the Iran conflict and demand growth. To summarize: 2025 returns were an improvement from 2023 and 2024, but it was still a tough year, particularly for farms with poor yields. For 2026, we expect weaker returns again; prices have increased slightly, but costs remain high. 2027 is the bigger concern because we expect a large cost increase associated with the Iran conflict, including higher fuel and fertilizer prices, general inflation, and higher energy prices. Looking at oil prices since the Iran conflict began, we saw a 45% increase, and they remain elevated. Diesel fuel prices have similarly increased. Farmers were more exposed to fuel cost increases for 2026, which will heavily impact harvest and going into 2027. Fertilizer prices have also spiked. Anhydrous ammonia and urea have increased dramatically with no sign of coming down, so ammonia prices over $1,000 should be expected this fall. DAP and MAP are also a big concern, as they require sulfur, which is exported from crude oil production in the Middle East. Supplies have been tight.
Todd Gleason: Those fuel and fertilizer concerns will flow right from the 2026 growing season into 2027. You’ve been listening to an excerpt of a presentation agricultural economist Gary Schnitkey made during the month of June. As of last week, USDA’s Illinois NASS office puts the state average at $1,022 per ton. You’ve been listening to the Closing Market Report from Illinois Public Media on this 28th day of July 2026. I’m Extension’s Todd Gleason. Thank you for being with us. Don’t forget to visit our website. The address is WILLAg.org. That’s WILLAg.org, and there you’ll find the latest opinions not only of Gary Schnitkey, but of his colleagues as well, along with the animal scientists and the crop scientists at the U of I.