Category: Crop Marketing

Extreme weather events, like drought, jointly impact agricultural production and rural infrastructure, including transportation infrastructure. An important part of this transportation infrastructure is the Mississippi River. It serves as one of the most critical networks for moving agricultural commodities from production to consumption areas, including export markets. In 2020, U.S. agricultural exports totaled $146 billion, increasing 7 percent year over year (U.S. Department of Agriculture’s Foreign Agricultural Service, 2021). Approximately 46 percent of grain exports were moved by barge in 2020. Soybeans, the leading U.S. agricultural export, rely heavily on barge transportation, with 53 percent of exports and 28 percent of total supplies moved by barge in 2020.

Despite this reliance on barges for moving U.S. grain, little is known about the link between extreme weather, rural transportation infrastructure, and crop prices. In 2022 and 2023, the Lower Mississippi River reached historic lows. In October, the U.S. Geological Survey (USGS) Memphis stream gauge read -12.0 feet and -10.8 feet in 2023 and 2022, respectively. The previous record was set in 1988 when the USGS Memphis stream gauge read -10.7 feet. These record-low water levels increased transportation costs and barge freight rates as documented by previous Southern Ag Today articles (Biram, et al., 2022; Gardner, Biram, and Mitchell, 2023; Biram, Mitchell, and Stiles, 2024). Higher transportation costs are transmitted to row crop producers through lower cash bids or a weakening of local crop basis (calculated as the cash price minus the futures price). Historic lows in Mississippi River levels during the fall harvest of the last three years have highlighted the need to measure the impact of these low river levels on rural infrastructure and communities.

Mitchell and Biram (2025) measure the impact of low water levels on the Mississippi River using Arkansas soybean basis data across 12 regional grain markets from USDA’s Agricultural Marketing Service and stream gauge data from USGS. They use a “low river” status measure that affects a grain market once the river gauge height falls below negative five feet and is weighted by the distance between a grain elevator and the closest public Mississippi River port.  They find that when the river stream gauge in Memphis, Tennessee reads -5 feet, Arkansas soybean basis weakens (widens) by $0.58 per bushel, $0.29 per bushel, and $0.12 per bushel for grain markets that are 5 miles, 10 miles, and 25 miles from the closest Mississippi River port, respectively. Similarly, they find that Mississippi soybean basis weakens (widens) by $0.55 per bushel, $0.28 per bushel, and $0.11 per bushel for the same distances to grain markets. Figure 1 below shows the degree of the impact of low river levels on soybean basis in Arkansas with markets near the river experiencing weaker basis than of those further from the river.

Figure 1. Impact of Low Mississippi River Levels on Soybean Basis in Dollars per Bushel in Arkansas

References

Biram, Hunter, John Anderson, Scott Stiles, and Andrew McKenzie. “Low Water Levels in the Mississippi River Result in Abnormally Weak Soybean Basis“. Southern Ag Today 2(45.1). October 31, 2022. Permalink

Biram, Hunter, James L. Mitchell, and H. Scott Stiles. “Low Rivers Levels on the Mississippi River: Not the Three-Peat We Want.” Southern Ag Today 4(39.3). September 25, 2024. Permalink

Gardner, Grant, Hunter Biram, and James Mitchell. “Low River Levels, Barge Freight, and Widening Basis.” Southern Ag Today 3(39.1). September 25, 2023. Permalink

Mitchell, J. L., & Biram, H. D. (2025). The effects of extreme weather on rural transportation infrastructure and crop prices along the Lower Mississippi River. Applied Economic Perspectives and Policy.

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Biram, Hunter, and James L. Mitchell. “Estimating the Impact of Low Mississippi River Levels on Soybean Basis in the Midsouth.” Southern Ag Today 5(12.3). March 19, 2025. Permalink

USDA released the latest World Agricultural Supply and Demand Estimates (WASDE) report on March 11, 2025.  The most significant item presented was a clarifying “note” at the beginning of the report that is important for users of USDA WASDE estimates to understand.

“The WASDE report only considers trade policies that are in effect at the time of publication.  Further, unless a formal end date is specified, the report also assumes that these policies remain in place.”

In other words, the effects of tariffs that are to be implemented in the future, even if already announced, are not included in the report estimates.  This includes the Canada and Mexico tariffs that have been suspended until April 2.  Alternatively, retaliatory tariffs from Canada, along with U.S. tariffs on China and China’s retaliatory tariffs are all currently in effect and are reflected in the current WASDE estimates as if they will continue indefinitely into the future.  Users of these estimates need to consider this factor in their interpretation.  

The effects of trade policy on markets are particularly important given the large percentage of exports that are reflected in crops contained in the WASDE report.  Table 1 shows the March 2025 WASDE estimates of supply, use, stocks, and prices of four major row crops produced throughout the southern region.  Total exports are reported, along with calculated exports as a percentage of total use.  Corn has the smallest estimated exports as a percentage of total use at 16%, followed by wheat and soybeans at 42% and cotton at 87%.  Thus, when and if tariffs are implemented, the USDA estimates have the potential to change with the inclusion of trade impacts in the WASDE report.  

Beyond this note, there was very little movement in current estimates.  The average price of wheat at $5.50 per bushel is 5 cents lower than a month ago, continuing a downward trend.    Ending stocks of wheat increased to 819 million bushels.  For U.S. corn, the USDA is projecting no change in ending stocks from the prior month, staying at 1,540 million bushels and maintaining a $4.35 per bushel marketing year average price for 2024/25.  Soybeans were also stable at the prior month’s estimates; however, the USDA revised the marketing year average price down 15 cents to $9.95 per bushel.  Meanwhile, the balance sheet for cotton remained unchanged from last month, while the marketing year average price was adjusted down a half cent to 63 cents per pound.  The next potential market mover from the USDA comes at the end of the month with the release of the Prospective Plantings report.

Table 1. 2024/25 Wheat, Corn, Soybean, and Cotton Supply, Use, Stocks, and Price Estimates, March 2025 WASDE

	Wheat	Corn	Soybean	Cotton
	Production and Supply
Planted (Million Acres)	46.1	90.6	87.1	11.18
Harvested (Million Acres)	38.5	82.9	86.1	8.27
Yield (Bushels/Pounds)	51.2	179.3	50.7	836
Production (Million Bushels/Bales)	1,971	14,867	4,366	14.41
Total Supply (Million Bushels/Bales)	2,808	16,655	4,729	17.57
	US Exports and Use
Exports (Million Bushels/Bales)	835	2,450	1,825	11.00
Total Use (Million Bushels/Bales)	1,989	15,115	4,349	12.70
Exports % of Total Use	42%	16%	42%	87%
	Stocks and Price
U.S. Ending Stocks (Million Bushels/Bales)	819	1,540	380	4.9
U.S. Stocks/Use	41%	10%	9%	39%
U.S. Avg. Farm Price ($/Bushel or Pound)	$5.50	$4.35	$9.95	$0.63

Data Source: USDA March 2025 WASDE

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Rabinowitz, Adam. “March WASDE Estimates and Note on Inclusion of Trade Policy.” Southern Ag Today 5(11.3). March 12, 2025. Permalink

Compared to last year, pre-planting relative financial risk between corn, cotton, and soybean production has changed for many mid-south crop producers. The change in pre-planting financial risk can be illustrated using projected crop insurance prices and crop budgets for 2024 and 2025. Crop insurance prices in this analysis were determined February 1-28 and crop budgets were University of Tennessee Crop Budgets for non-irrigated production. For ease of comparison, actual production history (APH) is unchanged between years and is equal to the target yield in the crop budgets.

Table 1 shows the difference between the crop insurance revenue guarantee for corn, cotton, and soybeans at a 75% buy-up coverage in 2024 and 2025. The crop insurance coverage per bushel or pound is the revenue guarantee divided by the APH. The crop insurance coverage level for corn increased slightly from $3.50/bu to $3.53/bu; however, coverage was reduced for cotton ($0.62/lb to $0.52/lb) and soybeans ($8.66/bu to $7.91/bu). At the same time, from 2024 and 2025, cost of production changed by +/- 2-3% depending on the commodity (Table 2). Cost of production will vary based on geographic location, targeted yield, and production practices.

Cost of production should be estimated for two separate measures—cash costs and economic costs. Cash costs are expenses that need to be paid during the production and marketing year, while economic costs include cash costs as well as ownership and other non-cash costs. In the short run, farms can operate covering cash costs, however, economic costs need to be covered for the operation to remain viable in the long-term. The cash and economic cost per bushel or pound are calculated by dividing cost by target yield (breakeven cash and economic cost per bushel or pound).

The crop insurance coverage per bushel or pound divided by the cash or economic cost provides an estimate of the relative financial risk by year and commodity. The analysis in Table 2 shows that in 2024, 74-75% of the economic cost of production for corn, cotton, and soybeans was covered by Revenue Protection crop insurance, compared to 76% for corn, 65% for cotton, and 67% for soybeans in 2025. For the start of the 2025 crop year, the financial risk mitigated by crop insurance favors corn over soybeans and cotton. 

Calculating relative cash and economic risk exposure between commodities produced on a farm can help guide crop insurance purchasing decisions (buyup coverage, unit structure, and companion policies) and guide a marketing and price risk management strategy to secure prices beyond crop insurance protection. 

Table 1. Revenue Protection Crop Insurance for Corn, Cotton, and Soybeans, 2024 and 2025

	2024 Crop Insurance
Commodity	Projected Crop Insurance Price($/bu or $/lb)	APH(bu or lb)	Coverage Level (%)	Revenue Guarantee ($/acre)	Crop Insurance Coverageper bu or lb
Corn	$4.66	175	75%	$612	$3.50
Cotton	$0.83	1,150	75%	$716	$0.62
Soybeans	$11.55	50	75%	$433	$8.66
	2025 Crop Insurance
Commodity	Projected Crop Insurance Price($/bu or $/lb)	APH(bu or lb)	Coverage Level (%)	Revenue Guarantee ($/acre)	Crop Insurance Coverage per bu or lb
Corn	$4.70	175	75%	$617	$3.53
Cotton	$0.69	1,150	75%	$595	$0.52
Soybeans	$10.54	50	75%	$395	$7.91

Table 2. 2024 and 2025 Estimated Cost of Production for Non-Irrigated Corn, Cotton, and Soybeans and Relative Crop Insurance Coverage 

	2024 Cost of Production
	Cash Costs ($/acre)	Economic Costs ($/acre)	Target Yield(bu or lb)	Cash Cost ($ per bu or lb)	Economic Cost ($ per bu or lb)	Crop Insurance Coverage divided by Cash Cost (%)	Crop Insurance Coverage divided by Economic Cost (%)
Corn	$697	$825	175	$3.98	$4.71	88%	74%
Cotton	$777	$958	1,150	$0.68	$0.83	92%	75%
Soybeans	$464	$579	50	$9.28	$11.58	93%	75%
	2025 Cost of Production
	Cash Costs ($/acre)	Economic Costs ($/acre)	Target Yield(bu or lb)	Cash Cost ($ per bu or lb)	Economic Cost ($ per bu or lb)	Crop Insurance Coverage divided by Cash Cost (%)	Crop Insurance Coverage divided by Economic Cost (%)
Corn	$696	$817	175	$3.98	$4.67	89%	76%
Cotton	$760	$932	1,150	$0.66	$0.81	78%	64%
Soybeans	$477	$587	50	$9.54	$11.74	83%	67%

References and Resources:

University of Tennessee Crop Budgets. 2024 and 2025. https://arec.tennessee.edu/extension/budgets/.

USDA Risk Management Price Discovery. https://public-rma.fpac.usda.gov/apps/PriceDiscovery.

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Smith, Aaron. “Changes in Relative Financial Risk for Corn, Cotton, and Soybeans in 2024 and 2025.” Southern Ag Today 5(10.3). March 5, 2025. Permalink

The February WASDE included an updated U.S. cotton balance sheet for 2024/25 (third column of numbers in the table below), with very minor month-over-month adjustments.  The supply side variables were unchanged from January, as were projected U.S. exports.  U.S. domestic use was cut 100,000 bales, which went straight to the bottom line of 100,000 additional ending stocks compared to last month.  This leaves U.S. ending stocks at a more bearish 4.9 million bales.

It is not surprising that the USDA left U.S. production unchanged from their January forecast.  As the ginning season winds down, cotton has two reliable measures to forecast production:  1) a count of actual physical bales (“running bales”) that are classed for fiber quality, and 2) a survey of running bales ginned.  Actual physical bales vary in weight but are around 500 pounds.  On the other hand, USDA-NASS cotton production forecasts and WASDE numbers are expressed in 480 pound “statistical bales.”  For conversion purposes, I assume a conversion factor of 1.02755 statistical bales for one running bale.

For the week ending February 6, USDA-AMS classing accounted for 13,855,096 running bales classed (or 14,236,804 statistical bales, about 99% of USDA-NASS’s production forecast). As of February 1, USDA-NASS also forecasted 13,961,700 running bales ginned (or 14,346,345 statistical bales, within about 60,000 bales of USDA-NASS’s production forecast).  So, the end of the 2024 crop processing is in sight, if not here, although they may sit on it until the final classing and ginning reports (typically in May). I don’t think there are any market changing surprises left on the production side that would affect prices moving forward.

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Robinson, John. “Late Season Indicators for 2024/25 U.S. Cotton Production.” Southern Ag Today 5(9.3). February 26, 2025. Permalink

On January 31, 2025, the White House announced a 25% import tariff on products from Canada and Mexico that was set to take effect on February 1^st but was soon after delayed for one month. Before the pause, Canada announced retaliatory tariffs on several agricultural products including peanut butter. Then on February 10^th, the White House announced a 25% tariff on aluminum and steel imports, and the European Union responded with a list of products that could be targeted with retaliatory tariffs, also including peanut butter. The recent trade disputes raise the question of how U.S. peanuts could potentially be affected.

While the U.S. only produces about 5% of the world’s peanuts, it exports 14% of the world’s peanuts. In the 2023/2024 marketing year, 22% of the 3.27 million tons of peanuts that the U.S. produced were exported to other countries. In contrast, 58% of U.S. peanuts went to domestic food production. The U.S. also exports significant amounts of processed peanuts, including peanut butter, which totaled over $256 million in the 2023/2024 marketing year. Thus, while export markets are not the largest destination for U.S. peanuts, they are still a significant portion, and the U.S. is a major peanut exporter. 

Figure 1 shows the top destinations for U.S. exported peanuts and processed peanut products over the past five marketing years. Mexico has been the top export destination for raw U.S. peanuts each of the past three years, at an average of 147,000 tons of peanuts per year. Canada ranks second over the same period, at 112,000 tons, on average. In the 2023/2024 marketing year, the European Union had a 126% increase in peanut imports from the U.S., totaling 142,000 tons. Lastly, China was the largest peanut export destination from 2019-2021, but has decreased its peanut imports from the U.S. the past three years. Overall, Mexico, Canada, China, and the European Union account for 90% of raw U.S. peanut exports. In contrast, 57% of U.S. processed peanut exports have gone to Canada and Mexico over the past five marketing years. The European Union nearly quadrupled its imports of processed peanut products from the U.S. this past marketing year. In sum, any reduction of U.S. raw or processed peanut exports to Canada, Mexico, and the European Union could present challenges to the U.S. peanut industry.

Figure 1: U.S. Peanut Exports by Destination, Form, and Marketing Year (thousand tons)

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Sawadgo, Wendiam. “How Might Trade Disputes Affect the U.S. Peanut Industry?” Southern Ag Today 5(8.3). February 19, 2025. Permalink