Farmers again experienced low profitability due to increased operating expenses and falling raw material prices - RaboResearch

In their latest report, RaboResearch experts note that rising operating costs and falling prices for agricultural products are reducing the profitability of farms. And this situation will persist in the main agricultural regions until mid-2027.

Geopolitical tensions and trade wars will complicate the situation in 2025. Despite a slight decrease in crop prices, overall operating costs are rising, creating problems for producers of soybeans, corn and other crops. But despite the reduction in margins, farmers are still focused on investing in their fields to maintain or expand production.

Record soybean and corn harvests are forecast in major agricultural regions, which is putting pressure on stock quotes, even as inventories decline.

In 2026, operating costs for soybean and corn farms will continue to rise, primarily due to higher fertilizer costs. Fertilizer and substitute prices are rising amid tight supply and high demand, reducing their availability in Brazil, the United States, Australia and major EU producing countries. RaboResearch estimates that the phosphate availability index has fallen to -0.68, the lowest level since 2010. If availability does not improve, fertilizer demand is expected to decline sharply next season.

Despite lower prices for key ingredients sourced from China, per hectare costs are rising in Brazil and the US, particularly for certain crops, due to reduced supply. The 2026 season is expected to be more expensive in most regions due to higher production costs.

Wheat, corn and oilseed producers are all set to record yields in 2025. The world’s largest corn producers – Brazil, China and the US – will see record harvests, while global wheat and oilseed yields will set new record levels for the sixth consecutive year. All of this is leading to lower commodity prices.

At the same time, fundamentals support the wheat and corn markets. Global corn stocks are declining after peaking in 2016/17 MY, and wheat stocks are declining after peaking in 2019/20 MY. The corn and wheat stock-to-consumption ratios are at their lowest levels since 2012/13 MY and 2014/15 MY, respectively. Domestic consumption of corn, wheat, and soybeans has reached record levels. Therefore, strong demand will support prices in the long term.

However, in the short and medium term, oversupply caused by record harvests in Brazil and the US will keep prices low, which will worsen the profitability of grain and oilseed production.