When Will the Market Turn for Farmers?

Agribusiness consultant Michael Kvistad says U.S. farmers remain under heavy financial pressure as high input costs collide with lower commodity prices, but he believes the cycle will eventually turn. Kvistad points to global production trends as the primary force keeping prices subdued, even as demand remains solid. “We are in an environment where there is ongoing expansion of planted acres, not in the U.S., not in Canada, but in South America, in South Africa. And so obviously that increases the competitive nature of global trade as those continents and those countries continue to emerge as a threat to the U.S. from a competitive standpoint in global trade. Then you couple that with the embracing of production enhancing technology that taking place all over and the trend of production not being threatened from a weather perspective, the production issue exceeding the growth rate in demand, and we stay in this lower price environment.” Kvistad says a turnaround would likely require either a major production threat or a renewed surge in global demand, particularly from China. “We can turn the economics around with a production cycle threat, which doesn’t appear at this time. We can turn it around with China coming back to the global marketplace with demand growth like they did five and 10 years ago. They’re still growing in demand for grains and oil seeds, but the rate of growth has slowed. So we can turn it around but the big question is when?”