U.S. agricultural income is the highest in three decades after corn and soybeans rose to records. The risk for farmers is that costs are rising even faster, increasing concern of a profit squeeze.
A U.S. Department of Agriculture report tomorrow may show costs are accelerating as revenue growth slows, similar to a pattern that led to a 1980s farm crisis that was the worst since the Great Depression, said Gary Schnitkey, a University of Illinois farm economist. Corn, wheat and soybean prices are all at least 18 percent below their peaks.
Fertilizer costs doubled from a year ago, while fuel increased 62 percent, USDA data show. Expenses probably will surpass the $279.2 billion that the USDA estimated in February, eroding net income the government pegged at a record $92.3 billion for 2008, farmers and economists said.
``Income peaked this year,'' said Kurt Line, who owns or manages more than 6,800 acres of farmland near Momence, Illinois. ``We should see a significant drop in 2009. For the number of dollars we will be risking the next two years, profit margins are not going to be robust.''>>>MORE
Corn and soybeans have rebounded as reduced crop yields push U.S. stockpiles to near five-year lows. Oil has reversed on U.S.-Russian tensions. Nickel has turned after Xstrata Plc closed a Dominican Republic plant.
The worst rout in the history of commodities may be ending, signaling a replay of the 2006 tumble that preceded a doubling of prices in the next 17 months as measured by the Standard & Poor's GSCI index. Only this time, the driver is supply cuts rather than increasing demand....MORE
Crude oil headed for its biggest weekly gain in almost two months and natural gas rose as producers evacuated rigs before the arrival of Gustav, forecast to be the largest hurricane in the Gulf of Mexico since Katrina.
Royal Dutch Shell Plc and ConocoPhillips started pulling workers from Gulf of Mexico platforms and cutting production in a region that pumps 26 percent of U.S. oil and 14 percent of gas output. Louisiana officials said they will start evacuating residents today in two counties around New Orleans that house refineries owned by Exxon Mobil Corp. and Valero Energy Corp.
Crude oil for October delivery rose as much as $1.80, or 1.6 percent, to $117.39 a barrel on the New York Mercantile Exchange. It was at $116.79 a barrel at 12:31 p.m. London time. Prices are up 2 percent this week, the biggest gain since the week of July 4....CONTINUED