'25 3rd Quarter Ag Outlook
- Grant Wiese
- Jun 30
- 4 min read
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'25 3rd Quarter Ag Outlook
It is time for our quarterly ag outlook. Enjoy!
Interest Rates
Fed meeting is happening as I write this. FedWatch (Source: CME FedWatch Tool – CME Group) is expecting an 81% chance that we see stay at the current target rate of 4.25-4.50%. The expectation is still calling for 3 rate decreases during the 2025 calendar year down to 3.50-3.75% by the December 10, 2025 meeting. It is worth noting they have been overly optimistic of the number of rate decreases for the better part of the past 2 years and I do not believe we will get there in the next 6 months.
The S&P has gained back what was lost during the tariff war, inflation has been down, and the economy seems to be doing alright.
10-year treasury bonds are 0.02% lower than where we started the year, now at 4.83% (Source: Resource Center | U.S. Department of the Treasury). There hasn’t been much positive movement in long term interest rates this year. The high was seen on May 21 at 5.10%.
The farm (and commercial) economy REALLY needs rates to move down immediately and stay there for the next 6 months. The reason this is so important is because all the 2020 5-year low interest rates loans are repricing this year. Producers have tight cash flows today. They REALLY won’t like their cash flow once their land note reprices from a 3% interest rate to 7% interest, doubling the amount due next year. Without long-term rates lowering, we will see more land and commercial properties coming up for sale in the short term.
Land Prices
Not a lot of land moving right now. Some quiet private deals are out there a little off the highs. With the amount of cash leaving wallets over the past two years, I imagine a lot of farmers will want to wait and see where they are positioned after harvest before they consider adding any more ground.
As we approach September 1, landlords will be considering the lower commodity prices and how they want to move forward. Do they risk farmers asking for lower rents, or sell and still try to capture a premium from the ground. In my experience, landlords are often delayed in realizing when prices are moving lower and asking too much when putting out properties as a listing.
Yields
Crop conditions remain strong for all crop types. With the amount of moisture and cool weather it is unlikely a record yield will be harvested, but so much of the final yield result is determined in July/August. Winter and spring long range weather forecasts were calling for a late summer drought. The heat would be helpful for crop progress and maturity. Rain makes grain.
Equipment Prices
Dealerships seem to be filling up with equipment again. It will be interesting to see if they push some lease deals again going into this fall to get equipment moving. Used equipment prices are off from the peak a few years back but haven’t fallen off a cliff yet.
Operation Improvements
It has been quite on the improvements front. A few projects are being completed by those with strong cash positions, but overall spending seems to be drastically down.
Commodity Price Direction and Marketing
Lower.
Wheat speculators are reducing shorts, as U.S. pre-season sales reach a 12-year high, though U.S. market share is limited; U.S. export share is still low (~10.5%) reuters.com+2reuters.com+2farmprogress.com+2.
Soybean outlook mixed: strong soybean oil performance vs. weak meal sentiment and dependence on late-season weather.
Corn futures dropped to record lows in July and December contracts amid speculator bearishness reminiscent of July last year reuters.com+1reuters.com+1.
Money managers are heavily net-short corn, citing an expected 28% rise in U.S. carryout and a robust Brazilian harvest farmprogress.com+2reuters.com+2reuters.com+2.
Major technical resistance for Dec ’25 corn which will be tough to break through. (see chart below)
Weather
I get my weather updates from Eric Snodgrass with Nutrien Ag Solutions, you should sign up for his e-mail, eric.snodgrass@nutrien.com, and check out his videos here: June 30, 2025: June's Pattern Flip | Fascinating Radar Echoes | Updates on European Drought/Heat...
The corn belt is reaching a critical point where high winds need to be avoided the first two weeks of July. Long term forecasts are showing it to be much dryer in Indiana & Illinois as we progress to mid-summer.
Working Capital Trend
We will be monitoring this one heading into fall. Line of Credit usage is higher this time of year due to the nature of the business, but balances on those lines are also higher than in years past when less borrowing was needed due to higher cash positions.
Inflation on input costs were not kind to producers putting in the crop. I expect the trend to be lower unless there is a large market rally going into harvest.
Overall Financial Picture
Reactive farmers continued to spiral lower as unsold grain is bottoming out. Farm bankruptcies are on the rise, and the number of questionable finance strategies from banks are occurring as well. Unfortunately, too often I see operational restructurings from farmers and their lenders at the wrong time. Most operations should not be adding debt to the balance sheet now. Cash flows were breakeven with higher priced grain being used in the winter projection. We need to see how yields play out and hope there is some correction to input costs for the 2026 crop.
Final Summary
Every operation is different and needs alternative advice compared to their neighbor. Nothing mentioned above is a one size fits all approach. While I hope this is helpful, what is better for your operation’s well-being is to update your own financials, run them by a trusted financial advisor, make your own plan for the upcoming year, and adjust that plan when necessary.
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Have a great week!
Grant
