• Agricultural returns tend to be cyclical in nature, a few years of good returns followed by a few years of negative returns.
Over the past seven years, corn and soybean producers in the United States have enjoyed their best run of returns in history.
Corn and soybean prices have reached and sustained at levels beyond expectations from a decade ago.
USDA’s estimates of net farm income have peaked at record levels over the past few years. But like most things that go up, crop prices and returns are likely to decline as we move forward.
Agricultural returns tend to be cyclical in nature, a few years of good returns followed by a few years of negative returns. That is the inherent nature of agriculture; it is a competitive industry.
And economic theory indicates the long-run profitability of a competitive industry is zero. So we should expect some negative years to balance out the recent good run.
Continue reading at Ag cycles: A crop marketing perspective.
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