After CHS leaders updated a room full of farmers on the state of corn, soy, wheat and fertilizer prices last week, one grower called out: “Do you have any good news?”
Commodity prices are distressed as a global supply glut far outpaces demand. Abundant harvests around the world have triggered declines in farm income and agribusiness profits, after record hauls during the pandemic.
The ups and downs of the global ag trade are part of life for farmers and cooperatives like Inver Grove Heights-based CHS. The industry has been here before, and the pendulum always swings back eventually, executives said.
But this down cycle comes amid particularly acute uncertainty.
Tariffs, if they come to pass, could hurt U.S. farm exports as they did in 2018. Wars and weather continue to be constant threats. Shifting regulations, in the U.S. and abroad, are adding complexity. And still, there is no new farm bill.
“I think the uncertainty is heavier because there’s such a diversity of things going on around the world,” said John Griffith, executive vice president for CHS’ ag business and CHS Hedging. “But we’ve been anticipating and seeing the downward cycle in ag for some time now.”
CHS — a $39 billion cooperative that buys, moves, processes and sells crops, fertilizer and oil — is coming off record years of profits, which could make for a softer landing as prices eventually bottom out.
“The cure for low prices is low prices” is the industry saying for the shifts in supply and demand that will eventually put ag on the upswing. Given past downturns, that could be a few years, however.