Wall Street’s latest freakout is officially here. Threats of a trans-Atlantic trade war over Greenland emerged over the holiday weekend, and — as I warned — quickly spilled over to markets around the world.
The uncertainty only added to the difficulty of forecasting anything, ag prices included. These doubts aside, it appears likely farmers should prepare for lower net incomes in the year ahead, with bottom lines falling as much as 25% or more.
USDA isn’t scheduled to release its detailed outlook on farm finances until Feb. 5, but the first earnings projections for 2026 almost certainly will be down from December’s estimate of $180 billion in 2025. Production, prices and costs for crops and livestock will ultimately determine how much farmers make. In the meantime, here’s my best guess about what to expect.
Trim $40 billion off the top
USDA in December put 2025 net farm income at just under $180 billion, only $2 billion less than the record farmers earned in 2023. Higher prices for beef, pork, turkeys and eggs offset falling crop revenues and a surge in government payments to $40.5 billion helped make up for declining crop totals.
Receipts from all crops could actually be steady in 2026, with increased revenues from oil crops like soybeans making up for a drop in feed grains, including corn. One wild card in these calculations comes from an accrual accounting procedure that’s difficult to predict: adjustments to the value of inventories from one year to the next. This variable swung by some $20 billion in recent years, depending on quantities and values held over. Farmers adjust incomes for tax purposes and also speed up or slow down sales to take advantage of rallies or wait for the market to bounce back.
If this adjustment runs at the average level for the last three years it could raise income projections to around $139 billion, still a drop of $40 billion, but some $9 billion more than if the change is the same as for 2024.
The top six caveats
USDA’s net farm income projections make headlines. The math used for the calculations means growers must look under the hood of any forecast for a better look at what the impact could be for their operations.
For example, traders generally assume higher soybean acreage in 2026 will balance lower corn plantings, with around 4 million acres shifting from one crop to the other. If demand is strong, soybean prices could see only a minor drop, while even robust usage might not prevent average cash corn from slipping to $3.25 to $3.50.
These forecasts come with plenty of caveats, so tracking these could be just as important as the bottom line of the outlook. Plenty of factors bear close attention.
The top six caveats:
- China as always looms large in the soybean trade, halting most deliveries from the U.S. in May, but starting to accept shipments again in December after extension of a tariff deal.
- The economics of bean trade could also depend on output from South America, especially Brazil, where China ramped up investments.
- A trade tiff with the EU could impact soybean sales, spilling over to corn and dampening demand for U.S. originations — unless shipments from Ukraine are hobbled by its war with Russia.
- Weather for Brazil’s big second crop, that safrinha, also could be a factor if weather doesn’t cooperate. Soil moisture ended 2025 well below normal in much of the country and forecasts for the next two weeks are dry.
- Myriad other factors could change with the winds in Washington, D.C., and beyond. Biofuel mandates bear scrutiny, potentially impacting ethanol blending and biodiesel usage.
- Whether oil trades for $50 a barrel or $100 — and either could happen — can make a significant impact.
So, stay nimble. In this environment it’s likely best to swing for singles instead of home runs — a reminder that the end of the football season at least brings the crack of the baseball bats for spring training.
