“Fair to middling” is how ag economist Jeff Dorfman would describe the crop year ahead. The North Carolina State University professor said farmers will need to find ways to make money at today’s commodity prices — and timing will be critical.
“Fair to middling is not all bad. Most commodity prices are trending flat to slightly down,” he said at January’s North Carolina Commodity Conference. “There are exceptions. I think 2025 would be a good year to be growing tobacco. The prices we see in 2025 are prices we saw in 2024, or they are going to be a little lower. You need to be able to make money at today’s commodity prices.”
Dorfman said marketing and hedging of crops will be key in 2025. There will be opportunities to make profits in the year ahead, and farmers need to take advantage of those opportunities when they arise.
“The trick is going to be selling your crops at the right time. Futures prices are going to go up and down during the year. I don’t think our prices on average over 2025 are going to be great,” Dorfman said. “But if we can get prices locked in at the right time, there will be opportunities in is 2025.
“I’m convinced where prices will get high enough that you can make money.”
Dorfman said farmers will see some relief in diesel and fertilizer prices that should continue to fall closer to pre-pandemic levels. He said diesel prices today are certainly not cheap, but they are not ridiculously expensive either. He said fertilizer prices are still double what they were before the pandemic, but they aren’t tripled or quadrupled as they were during the pandemic.
Deere effect
Dorfman said an important indicator to watch on the health of the farm economy is John Deere’s earnings report released to shareholders every three months. In the report, the company states how it did in the past quarter and how it expects to do for the rest of the year.
“That gives me a pretty good idea on how farmers are going to be doing in the future,” he said. “Because if farmers aren’t doing well then, they’re not buying million-dollar pieces of equipment from John Deere. If you look at what John Deere thinks it’s going to do in the next year, it will tell you a lot about what they think you’re going to be doing in the next year.
“If you look at John Deere right now, they say their commercial ag sales are down 25%, their total sales are down 20%, and they don’t think 2025 is going to be a much better year.”
Finally, Dorfman encouraged farmers to “farm for value, not volume.” Getting the biggest yield isn’t always your top priority.
“It’s not just about producing the most of something. You’re not in business to grow the highest yield per acre you can get; you’re in business to make the most money that you can make. … Maybe you don’t use as many inputs. Maybe you don’t try go get as high a yield,” he said.