U.S. farm incomes could be boosted by grain recovery – Chicago Fed

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A combine dumps grain into the tractor, during the wheat harvest in Shelbyville, Kentucky, U.S. June 29, 2021. REUTERS/Amira Karaoud

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CHICAGO, March 3 (Reuters) – The current rise in U.S. grain and oilseed prices could help bolster U.S. farm incomes this year as Russia’s invasion of Ukraine rattles commodity markets basis over fears of a massive disruption to exports from the Black Sea region, an economist from the Federal Reserve Bank of Chicago said Thursday.

But the magnitude of the financial boost this will ultimately represent for farmers remains unclear, as production costs soar and the levels of pandemic and trade war-related support the federal government has been disbursing. since 2019 are decreasing.

“While higher agricultural prices are helpful, inputs are also higher,” Chicago Fed economist David Oppedahl said during a Federal Reserve webinar on US agriculture.

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U.S. net farm income is expected to hit $113.7 billion this year, down 4.5% from 2021, according to data released in February by the U.S. Department of Agriculture.

But the USDA forecast is from Feb. 4, 20 days before Russia invades Ukraine.

In its wake, Chicago Board of Trade wheat futures jumped 26% and corn futures are around $1.00 a bushel from their all-time high. Russia and Ukraine together account for about 29% of world wheat exports and 19% of corn exports.

Direct government payments are expected to reach $11.7 billion in 2022, up from about $27.1 billion in 2021, $46.6 billion in 2020 and $22.4 billion in 2019, according to the most recent data. recent from the USDA.

At the same time, spending in almost all categories of farm spending is expected to increase this year. According to USDA data, total production expenses – which include fuel, fertilizer and crop chemical costs, among others – are expected to be the highest since 2015 when adjusted for inflation. .

Such financial tensions are also observed in the north. Canadian farm income is expected to fall 26% this year to C$19.7 billion from record highs in 2021, due to last year’s drought, said Agriculture and Agri-Food Canada, the Department of Agriculture of the Country, February 24.

“There’s definitely a lot of uncertainty and we’ll just have to monitor things going forward and see how things develop,” Oppedahl said.

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Reporting by PJ Huffstutter in Chicago; additional reporting by Rod Nickel in Winnipeg, Canada, and Mark Weinraub in Chicago; edited by Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

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