Grain prices are near five-year lows and farm incomes are at their lowest levels since 2002.
North Dakota farmer Randy Thompson plans to apply 30% less nitrogen fertilizer to his corn this year to save money in the face of crashing crop prices.
In Minnesota, Andy Pulk is trucking crop nutrients to his farm from 350 miles away because he found a better price than his local cooperative could offer. He has also halted purchases of machinery.
“We’re on a complete spending hold across the farm,” Pulk said.
With more acres than ever before likely to be planted with soybeans and corn in the U.S. Midwest this year, companies including seed maker Monsanto MON and fertilizer seller CF Industries Holdings CF might have expected a windfall for earnings.
But with grain prices near five-year lows and farm incomes at their lowest levels since 2002, growers are tightening their belts by reducing spending on everything from fertilizer to seeds to chemicals.
Monsanto, the biggest U.S. seed maker, will give investors a glimpse into the impact of the cost cutting on Wednesday, when the agribusiness sector kicks off quarterly earnings reports.
Last month, the company cut its full-year earnings forecast, citing pricing pressure in seeds and farm chemicals, and lowered its guidance for second-quarter earnings from ongoing operations to $2.35 to $2.45 per share. That was down from $2.90 in the same quarter in 2015....MUCH MORE