Is Agriculture Really Turning the Corner?

This Week In Ag #191

Agriculture has “turned the corner,” according to the leader of the USDA. In an interview last week, the US Secretary of Agriculture went on to say, “inputs are coming down” and “prices are rising” for corn, wheat and cotton.

Really?

The current Corn-to-DAP (Diammonium Phosphate) ratio just hit an all-time high for November. It now requires 175 bushels of corn to pay for one ton of DAP, a popular dry fertilizer. This record-setting ratio is over $40 higher than any level seen in the past 20 years.

Since their late summer rallies, both corn and wheat prices have dropped over $1 per bushel. Cotton has dropped over $13/cwt. We’ve basically given back the entire rally. Inland corn prices are now sitting around $4.15 per bushel. Breakeven prices are about $5.

It’s true that the US achieved record exports in 2026 for these three key crops and new trade deals are happening. This is certainly encouraging. But a massive flash sale of 69 million bushels of corn made to Mexico last week did virtually nothing to move the market.

Farm input costs are projected to reach record highs in 2027.

Seed costs are rising by $10 per bag for corn. The most popular herbicides, glyphosate and glysinophate, have seen double-digit price increases in recent months. While diesel fuel has dropped a few pennies, it’s still near record prices and $2.50 per gallon above last year. Interest rates continue to rise, with another increase expected soon. Feed costs for livestock are 11% sharper than last year.

Led by a 6% increase for 28% UAN, prices for seven of the eight major fertilizer products rose this past month. The lone holdout was urea, which dropped a whopping $1 per ton. All eight major fertilizers remain well above last year’s price levels.

The Farm Equipment Sales Index – a monthly economic indicator developed at Creighton University that measures the health of ag equipment sales – has dropped below neutral for 30 consecutive months. It now stands at 18 on a scale of 1-100. According to Purdue University, only 20% of farmers believe it’s a good time to make major purchases.

I fully appreciate the spirit of positivity. You’d be hard-pressed to find a bigger optimist than me. But we must also live in Realville.

Truth is, USDA has a major trust issue with farmers. This was amplified during USDA’s September crop production estimate report for corn. Due to “processing errors” associated with plant populations, ear counts and ear sizing, corn yields in Nebraska (the USA’s third largest producer of corn) were raised by 11 bushels per acre shortly after the report. USDA data and estimates are chief drivers of grain prices, so market reactions were predictable and brutal. Later, USDA corrected its Nebraska estimate to a 5 bu/A gain. The net result was an overall nationwide increase of 0.3 bushels, projecting a USA average of 178.8.

In a recent poll, 73% of farmers rated their confidence in USDA data as a 1 or 2 (out of 5). Just 4% rated it as a 4 or 5.

Upon creating the USDA in 1862, President Abraham Lincoln called it “The People’s Department,” explaining it is “for the purpose of communicating useful knowledge on that subject – the most important of all – and of introducing valuable new seeds and plants… It is peculiarly the people’s Department, in which they feel more directly concerned than in any other.”

To earn the trust of the people, USDA must act like Honest Abe.