After several years of record profits for farmers and agribusinesses, the ag industry is in a down cycle that usually lasts four to five years, says Nelson Neale, president of CHS Hedging.
In an episode of the It Takes a Co-op™ podcast titled “Economic and global trends affecting agriculture,” Neale discusses the U.S. and ag economies and global trends affecting agriculture.
He says farmers have an ally to assist them when making marketing, production and business decisions.
“Leverage all the resources that are out there in the cooperative system,” Neale says. “Leverage the agronomy expertise. Leverage the energy expertise. Understand where markets are and what you can do from a risk management perspective. All those tools and all that expertise are absolutely at your fingertips in the cooperative system.”
High interest rates and inflation has hurt the U.S. and ag economies. However, Neale says there are signs of improvement.
The U.S. gross domestic product in the second quarter of 2024 was 3%, which he says is historically good. He also says employment numbers are strong, and the Federal Reserve has started to cut interest rates.
“If we can get relief on rates overall in the country, that's certainly going to propagate through to variable interest rate loans in the agricultural community,” he says.
Overall, Neale says the ag economy is “fairly resilient” regardless of what happens with the U.S. economy. “At the end of the day, the agricultural components that make up products are ultimately still there.”
Grain trade flows are changing, he says. The U.S. is no longer the dominant grain and oilseed exporter as Brazil and other countries have stepped up production and sales. Chinese demand for feed grains and oilseeds is also expected to lessen as its population decreases. On the bright side, he points out demand is increasing from other countries in Southeast Asia and Africa and domestically from the renewable fuels industry.
“There’s plenty of green shoots out there,” Neale adds. “It's just another turn in the cycle that I'm sure we'll be able to weather.”
Follow It Takes a Co-op and listen to it on podcast apps, including Apple Podcasts and Spotify, or via the CHS website. Most episodes also will have a video version on the CHS YouTube channel.
CHS launched the podcast in October, featuring experts from inside and outside of the company, to help raise awareness of the role and value of the cooperative system. The debut episode, “The impact of the cooperative system,” featured CHS Board of Directors Chair Dan Schurr and farmer and co-op owner Shannon Forster.
If you have suggestions for topics or guests in future episodes, send an email to social@chsinc.com.
