US Farm Profits Look Set to Weaken in 2023, Gro Model Shows

An early look into how much US farmers will earn this season shows that profitability is likely to be lower than last year as Gro’s machine learning-based yield forecast models point to a substantial drop in crop yields. Gro’s US Farmer Profitability Application currently indicates that operating profit per acre will be down 38% for corn and 20% for soybeans compared with 2022. 

Lower producer prices, which are updated daily in the Gro Farmer Profitability app, also help account for the forecasted drop in operating profit. 

These downward pressures on profit prospects more than offset the benefits from reductions in most per-acre operating costs, including for seed, fertilizer, and fuel, according to the Gro Farmer Profitability app. Labor expenses are among the few input costs that are higher this year. 

US farm profits could sink further if dry conditions across the Corn Belt continue to push crop yields lower, potentially cutting into production. Gro’s US Yield Forecast Models for corn and soybeans have declined substantially in the past month as the Gro Drought Index, weighted for corn and soy planted areas using Gro’s Climate Risk Navigator for Agriculture, rivals the dismal conditions last seen in 2012, as Gro wrote about here. 

Gro’s US Farmer Profitability Application provides daily farm profit forecasts for corn and soybeans at the national and sub-national levels. In contrast to other publicly available farm balance sheets, which typically update one to three times a year — including the USDA’s ERS Commodity Costs and Returns — the Gro Farmer Profitability app updates daily with the latest local producer prices provided by DTN and with Gro’s machine-learning yield model forecasts. 

Among other features, the Gro app also provides fertilizer prices, trade data, and crop progress data for a wide variety of crops, both in the US and globally, as seen in this Gro display (login required). 

Farm operating profits will be sharply lower in Illinois, the top corn-producing state, where Gro’s Corn Yield Forecast Model currently predicts yields this year will slump by more than one-third versus 2022. The Gro Farmer Profitability app, which breaks down the state into three regions, shows that southern Illinois corn farmers will see the steepest decline in operating profit, as shown in this Gro app display, followed by the northern and central parts of the state. 

The Gro app makes separate calculations for various crop rotation practices, either corn following corn, or corn following soybeans. 

Soybean farmers in neighboring Iowa, the No. 2 producer, will see operating profit per acre drop by double digits this year, according to current estimates from the Gro Farmer Profitability app. Producer prices, which impact farm revenues, are currently indicated down 17% from last year. In addition, operating costs are up 6%, including increased labor and machinery expenses, as shown in this Farmer Profitability app display. Gro’s US Soybean Yield Forecast Model currently points to a single-digit decline in soybean yields for the state. 

With much of the US growing season still ahead, crop growing conditions can change as can farm economics. To learn how Gro’s Farmer Profitability app, contact a Gro team member here.