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  • Price Relationships of Beef X Dairy Calves and Dairy Calves

    Price Relationships of Beef X Dairy Calves and Dairy Calves

    Authors: Charley Martinez, Parker Wyatt, and Eli Mundy

    Over the last few years, the Beef X Dairy (BxD) markets have gained attention due to the rise in BxD prices. Day-old calves (80-90 pounds) have gone from $50 per head a few years back to recent Pennsylvania auction data showing 80-89 pounds BxD calves averaged $1706.21 per head for the week ending March 21st. A question that has been asked recently is centered around the value of purebred dairy calves compared to BxD calves. For the same week, 80-89 pound purebred dairy calves averaged $1329.60 per head, a difference of $376.60. This SAT examines the premium over time for BxD calves over purebred dairy calves. 

    The United States Department of Agriculture’s (USDA) weekly New Holland Pennsylvania market report currently provides the most extensive and consistent information regarding the price of BxD and purebred dairy calves. Very few markets report BxD calves separately, and there may be variation in local prices influenced by regional differences in demand, transportation cost, and buyer composition. Figure 1 shows the price premium received for BxD calves over purebred dairy calves at the Pennsylvania market for the previous 5-year average (2020-2024), 2025, and 2026.  

    Figure 1. Monthly Premium for BxD Calves Over Purebred Dairy Calves ($/head), New Holland, PA.

    Data from USDA-AMS

    The chart shows a consistent premium per head for BxD calves relative to purebred dairy calves with increased premiums during August through October. During 2020–2024 (thick red line), the average premium ranged from about $130 (first quarter) to $200 per head (August-October). In 2025 (dotted line), the premium was notably higher than the previous 5-year average, beginning the year at approximately $255 per head in January, climbing through the spring, and reaching its highest levels of about $450–$470 per head in early fall, before declining toward year‑end. In 2026 (thin solid blue line), there has been an even larger premium than last year, approximately $340 in January and over $420 per head by February. This suggests an exceptionally strong relative demand for BxD calves compared to dairy calves during that period. 

    With no clear signs of increases in the beef calf crop, the premiums for BxD calves can be expected to remain strong or continue to increase. These premiums reflect tight supplies of feeder cattle and a willingness from feedlot operators to pay for calves that offer improved feed efficiency, growth performance, and carcass characteristics relative to purebred dairy calves. This raises a few important questions: how high can the premium go, and what happens when traditional beef cattle numbers begin to rise? If the beef herd expansion is relatively gradual, BxD calves may retain a meaningful premium and a strong role in the supply chain. Conversely, rapid rebuilding of the beef herd could result in a faster narrowing of the price differential, particularly if feedlot operators shift back quickly to traditional beef calves. Ultimately, the long-run trajectory of BxD premiums will hinge on the rate of supply growth, their ability to compete with traditional beef calves on feedlot efficiency, and downstream demand for beef. 

    Martinez, Charley, Parker Wyatt, and Eli Mundy. “Price Relationships of Beef X Dairy Calves and Dairy Calves.” Southern Ag Today 6(14.2). March 31, 2026. Permalink

  • What Lower Interest Rates Mean for 2026 Budgets

    What Lower Interest Rates Mean for 2026 Budgets

    Following the benchmark rate reductions in 2025, the Federal Open Market Committee (FOMC) left the federal funds target rate unchanged at 3.50–3.75% at its March 2026 meeting (Federal Reserve, 2026). While benchmark rates have come down from post-pandemic highs, borrowing costs continue to remain elevated compared to the low-interest-rate environment before 2022. For farmers across the country, this poses a significant challenge, as interest expenses remain a notable portion of crop budgets while trying to balance the drastic increase in operating expenses. The expectation of near-zero rates might be unrealistic, but it’s important to highlight that even with lower rates, interest expense continues to contribute to the on-farm price-cost squeeze.

    Table 1 is derived from a previous article (see Loy, 2023) and updated to reflect an average budget for a Midsouth corn, cotton, rice, or soybean farmer in 2026. Interest expenses are based on the average fixed operating loan rates from the Federal Reserve Bank of Kansas City Agricultural Credit Survey. Operating loan terms are assumed to have a 9-month payback period and include select 2026 pre-harvest production expenses.

    Table 1. Southern Region, Select 2026 Pre-Harvest Production Expenses ($/acre)

     CornCottonRice Soybeans
    Seed$125.00$113.00$130.00$91.00
    Fertilizer$360.00$290.00$258.00$117.00
    Pesticides$54.00$205.00$118.00$93.00
    Fuel $29.00$52.00$104.00$64.00
    Operating Interest Expenses at varying rates:    
        Q1 2026 (7.20%)$29.93$34.78$32.15$19.24
        Q1 2025 (7.50%)$31.98$37.16$34.34$20.55
        Q1 2024 (8.20%)$34.19$39.73$36.72$21.97
        Q1 2023 (7.43%)$31.64$36.76$33.98$20.33

    Note: Operating Interest Expense assumes a 9-month term (e.g., 7.20% * (9/12) * principal borrowed)

    Table 1 illustrates that the benchmark rate reductions, when applied to this year’s production expenses, have provided little relief. Estimated interest expenses for 2026 are down marginally compared to the peak rate of 2024, when operating costs would have generated about $4.26, $4.95, $4.58, and $2.74 more interest expenses per acre for corn, cotton, rice, and soybeans, respectively. However, the reductions are even more modest compared to interest costs in 2023 and 2025.

    Overall, while interest expenses have eased, it remains a meaningful part of pre-harvest production planning. Recent benchmark rate reductions have provided some relief, but razor-thin on-farm margins persist. At the same time, higher input costs to grow the same crop have increased the amount that must be financed, potentially offsetting some of the benefits from a lower interest rate environment.      

    References

    Board of Governors of the Federal Reserve System, Federal Open Market Committee. 2026. Federal Reserve Press Release, January 28, 2026. Retrieved from, https://www.federalreserve.gov/monetarypolicy/files/monetary20260128a1.pdf

    Federal Reserve Bank of Kansas City. 2026. Federal Reserve Ag Credit Survey. Retrieved from, https://www.kansascityfed.org/center-for-agriculture-and-the-economy/agricultural-data-and-indicators/

    Loy, R. 2023. The Federal Funds Rate Impact on Agricultural Lending. Southern Ag Today 3(34.3). Retrieved from, https://southernagtoday.org/2023/08/23/the-federal-funds-rate-impact-on-agricultural-lending/

    Loy, Ryan. “What Lower Interest Rates Mean for 2026 Budgets.” Southern Ag Today 6(14.1). March 30, 2026. Permalink

  • Old Cooperatives and New Farmers

    Old Cooperatives and New Farmers

    More than 23% of agricultural cooperatives are more than 100 years old and 77% are more than 50 years old. Part of the clientele for those cooperatives are young producers. Almost 300,000 farmers (9% of the total) are under 35 years of age. This small but growing segment of the farm population often has limited access to land and credit and has greater financial vulnerability.  Old cooperatives and young farmers can clearly benefit from each other but there are challenges involved in successfully matching the two.

    Most legacy U.S. agricultural cooperatives operate under the open membership model where members invest in the business by receiving a portion of profits as revolving equity. That structure is young producer friendly in that it allows membership without a large up-front investment.  On the other hand, the benefit stream from a cooperative is long-term in nature. Revolving equity patronage only turns into cash after a multi-year delay, and unlike corporate stock, cooperative equity is non-tradable and non-liquid. Agricultural cooperatives may have to re-think long revolving periods if they want to appeal to young producers.

    Agricultural cooperatives are also user-controlled, and most cooperatives are eager to have young producers serve on their boards of directors. Unfortunately, young producers may be reluctant to join the board due to the competing use of their time from farm, family and off-farm work obligations.  Agricultural cooperatives need new blood and new ideas. They may have to explore new, and less time-demanding, options to involve younger producers.

    Despite these challenges, old cooperative and young producers can help each other.  Agricultural cooperatives are constantly regenerating themselves and they need new members to create new equity. Young producers face operational and financial challenges. They need secure market access and improved profitability from supply chain ownership. Agricultural cooperatives were formed to allow producers to collectively accomplish what they could not do on their own. 

    While it is true that young producers may desire a different set of products and services relative to their more experienced brethren, they still represent the future of agricultural cooperatives. For example, young producers may be more interested in input financing and less interested in pre-pay discounts.  Their participation may represent new opportunities and new risks for cooperatives. Young producers also tend to be technology savvy.  Cooperatives and young producers might make excellent partners in the journey to evaluate and adopt new technologies.

    Established cooperatives can benefit from young producers, and young producers can benefit from established cooperatives.  Perhaps both sides can explore these opportunities together!

    Kenkel, Phil. “Old Cooperatives and New Farmers.” Southern Ag Today 6(13.5). March 27, 2026. Permalink

  • U.S.-Indonesia Trade Agreement Framework

    U.S.-Indonesia Trade Agreement Framework

    Authors Landyn K. Young and Luis Ribera

    Another trade agreement framework was announced by the White House a few weeks ago, this time with Indonesia. The released statement explains that tariffs on 99 percent of exports from the United States to Indonesia will be removed, as well as addressing non-tariff barriers. In exchange, tariffs will remain at 19 percent for imports from Indonesia. U.S. agricultural imports from Indonesia reached $7.14 billion in 2025, with exports to the country lagging behind at $2.89 billion, which makes Indonesia the 9th largest source of U.S. agricultural imports and 12th largest export destination. 

    Graph 1. U.S.-Indonesia Agricultural Trade, 2020-2025

    Source: Global Agricultural Trading System (GATS), USDA/FAS

    Exports to Indonesia are dominated by oilseeds which makeup over a third of agricultural export value at $1.14 billion. An additional $752 million of exported products were grains and feed. Dairy products accounted for $221 million of the $454 million of animal products exported to Indonesia. Following these main groups are cotton ($146 million), ag chemicals ($58 million), and fish ($55 million).

    Graph 2. U.S. Agricultural Exports to Indonesia, 2025

    Source: Global Agricultural Trading System (GATS), USDA/FAS

    On top of being the most exported agricultural category, oilseed products led imports from Indonesia. Palm oil and palm kernel oil together made up $2.03 billion of the $3.11 billion in oilseed product imports. Fish, primarily shellfish, accounted for a quarter of agricultural imports with $1.86 billion in imports, followed by cocoa and coffee. Overall, Indonesia seems like a very promising market for agricultural products.

    Graph 3. U.S. Agricultural Imports from Indonesia, 2025

    Source: Global Agricultural Trading System (GATS), USDA/FAS

    Sources

    Foreign Agricultural Service (FAS). Global Agricultural Trade System (GATS). Online database. Online public database accessed February 2025.

    The White House. “Fact Sheet: Trump Administration Finalizes Trade Deal With Indonesia.” February 19, 2025. https://www.whitehouse.gov/fact-sheets/2026/02/fact-sheet-trump-administration-finalizes-trade-deal-with-indonesia/.

    Young, Landyn K., and Luis Ribera. “U.S.-Indonesia Trade Agreement Framework.” Southern Ag Today 6(13.4). March 26, 2026. Permalink

  •  Brazil’s Record Soybean Crop Meets a Fragile Supply Chain

     Brazil’s Record Soybean Crop Meets a Fragile Supply Chain

    Brazil’s 2025/26 soybean crop is headed for a record near 6.6 billion bushels (USDA, 2026). Maples (2026) laid out the fundamentals in Southern Ag Today earlier this season. But as the season has unfolded, the key question for U.S. producers is no longer whether Brazil has soybeans. It is whether Brazil can move them to market as smoothly as the headline crop suggests. Three forces suggest otherwise: logistics frictions are disrupting exports at peak season; geopolitical shocks are raising costs across the supply chain; and a structural rise in domestic crushing is keeping more of the crop inside the country.

    The first pressure is timing and logistics. Heavy rains in the Center-West slowed harvest while drought in the South trimmed yields. By mid-March, Brazil’s soybean harvest was running 10.6 percentage points behind the same point last year (Figure 1). About 60% of Brazil’s soybeans move to port by truck, yet only about 14% of the country’s roads are paved (Salin, 2025). A phytosanitary dispute with China compounded the problem: Brazil increased inspections on soybeans bound for China at Beijing’s request, Cargill paused exports to China, and longer certification waits raised both demurrage and freight costs (MAPA, 2026). 

    The second pressure is cost. Brazil imports more than 80% of its fertilizer (ANDA, 2026), and nearly 30% of global fertilizer exports transit the Strait of Hormuz (FAO, 2026). The closure stranded roughly a million metric tons and sent diesel prices surging in rural Brazil. Because the soybean crop was largely fertilized before the shock, the immediate input-cost pressure falls more on safrinha (second crop) corn and on 2026/27 budgets. But freight costs hit now: bunker fuel prices have surged as the Middle East conflict disrupts supply to Singapore, the world’s largest ship-refueling hub (Bloomberg, 2026).

    Beneath these disruptions, a structural shift is changing the soybean balance sheet. Domestic crushing is projected to reach a record 2.26 billion bushels, up about 50% from a decade ago (ABIOVE, 2026). Biodiesel policy is one reason. Brazil’s blending mandate has risen from B7 (or 7%) in 2016 to B15 (or 15%) in 2025, and soybean-oil-based biodiesel production has more than doubled, from about 0.8 billion gallons to 1.9 billion as shown in Figure 2 (ANP/ABIOVE, 2026). More beans crushed at home means fewer whole soybeans available for export.

    Two regulatory shifts add nuance. Cargill, ADM, and Bunge withdrew from the Amazon Soy Moratorium in early 2026 after a Mato Grosso state law penalized companies adhering to environmental agreements exceeding federal requirements. Their exit came as the EU Deforestation Regulation (EUDR) is set to enter into force. That collision could create openings for U.S. soy in Europe. Meanwhile, the EU-Mercosur trade agreement would give Brazilian soy preferential European access, but a legal challenge could delay implementation (Council of the European Union, 2026).

    Brazil still has an enormous crop. But large production does not guarantee maximum export pressure. Fertilizer costs are higher. Bunker fuel is tight. Port roads are congested. Ships face delays at port. And a growing share of Brazil’s soybeans are staying at home to be crushed domestically. In 2026, the key gap is between Brazil’s ability to grow soybeans and its ability to move them efficiently. That gap is where the competitive opportunity for U.S. producers may emerge. 

    Figure 1. Brazil Crop Progress Is Running Behind Last Year’s Pace

    Note: Soybean harvest and safrinha corn planting as a percentage of total area, week ending March 14. The soybean harvest trailed the prior year by 10.6 percentage points; safrinha corn planting lagged by 4.1 percentage points. Source: CONAB (2026b).

    Figure 2. Soybean-Oil-Based Biodiesel Production in Brazil Has More Than Doubled Since 2015

    Note: Annual biodiesel production from soybean oil in billion gallons, 2008 through 2025. Production rose from about 0.2 billion gallons in 2008 to 0.8 billion in 2015 and 1.9 billion in 2025. Labels indicate Brazil’s national biodiesel blending mandate, expressed as the share of biodiesel required in commercial diesel fuel: B2 = 2%, B5 = 5%, B7 = 7%, B8 = 8%, B10 = 10%, B14 = 14%, B15 = 15%. Soybean oil accounts for roughly 70–75% of all Brazilian biodiesel feedstock.
    Source: ANP/ABIOVE (2026).

    References

    Associação Brasileira das Indústrias de Óleos Vegetais. (2026, March). Atualização das projeções do complexo soja para 2026 [Data set]. ABIOVE. https://abiove.org.br

    Associação Nacional para Difusão de Adubos. (2026). Estatísticas: Entregas e produção de fertilizantes, 2025 [Data set]. ANDA. https://www.anda.org.br

    Agência Nacional do Petróleo, Gás Natural e Biocombustíveis & Associação Brasileira das Indústrias de Óleos Vegetais. (2026). Produção de biodiesel por matéria-prima: Total nacional, 2008–2025 [Data set]. ANP/ABIOVE. https://www.gov.br/anp

    Bloomberg. (2026, March 16). Iran war spurs volatility for Singapore ship fuel distributors. Bloomberg. https://www.bloomberg.com

    Companhia Nacional de Abastecimento. (2026a). Boletim de safras: 6º levantamento, safra 2025/26. https://www.conab.gov.br

    Companhia Nacional de Abastecimento. (2026b). Progresso de safra: Plantio e colheita, semana de 8 a 14 de março de 2026 [Data set]. https://www.conab.gov.br

    Council of the European Union. (2026, January 9). EU-Mercosur: Council greenlights signature of the comprehensive partnership and trade agreement [Press release]. https://www.consilium.europa.eu

    Food and Agriculture Organization of the United Nations. (2026, March). Global agrifood implications of the 2026 conflict in the Middle East. FAO. https://openknowledge.fao.org

    Maples, W. E. (2026, January 21). Brazilian crop progress: What U.S. producers should watch. Southern Ag Today, 6(4.3). https://southernagtoday.org

    Ministério da Agricultura e Pecuária. (2026, March 13). Ofício-Circular nº 7/2026: Procedimentos de inspeção fitossanitária de cargas de grãos destinadas à exportação. Departamento de Defesa Agropecuária/Secretaria de Defesa Agropecuária. https://www.gov.br/agricultura

    Salin, D. L. (2025, September). Soybean transportation guide: Brazil 2024. U.S. Department of Agriculture, Agricultural Marketing Service. https://dx.doi.org/10.9752/TS048.09-2025

    USDA World Agricultural Outlook Board. (2026, March). World agricultural supply and demand estimates (WASDE-672). U.S. Department of Agriculture. https://www.usda.gov/oce/commodity/wasde

    Calil, Yuri. “Brazil’s Record Soybean Crop Meets a Fragile Supply Chain.” Southern Ag Today 6(13.3). March 25, 2026. Permalink