Bart L. Fischer and Joe Outlaw



While farmers have been dealing with inflation in input costs since the onset of COVID-19, relatively high commodity prices (in large measure resulting from the war in Ukraine) helped blunt the pain through 2022. The perfect storm arrived as commodity prices started plummeting in 2023. Over the last 3 years—from 2023 to 2025—the losses have been piling up. As noted in Table 1, the average corn, soybean, and wheat producer has accumulated roughly $300 per acre in total losses over the last 3 years. For cotton producers, that estimate is roughly $1,000 per acre.&nbsp;&nbsp;After all their crops have been sold and all their bills have been paid, that’s how far in the hole they remain. Thankfully, the federal government has stepped in at various times to help. But, this all begs the question of what the net result over the last 3 years has been. This is especially the case as calls continue to circulate on Capitol Hill about the need for additional bridge assistance.



As noted in Table 1, Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) provided little assistance for 2023 and 2024 largely because the reference prices had not been updated since the 2018 Farm Bill.&nbsp;&nbsp;While ARC and PLC will deliver significantly more assistance for the 2025 crop year—owing to improvements in the One Big Beautiful Bill from last summer—that assistance is not slated to arrive until later this year (October 2026). Congress also stepped up in December 2024 and created the Emergency Commodity Assisstance Program (ECAP), providing $10 billion in assistance for economic losses incurred in the 2024 crop year. More recently, Secretary Rollins announced an additional $11 billion for row crop producers via the new Farmer Bridge Assistance (FBA) program for economic losses incurred in the 2025 crop year.



That is a tremendous amount of assistance. Is more really needed? While we will leave the question of “need” to policymakers to debate, we do offer the following observations. As reflected in Table 1 and Figure 1, despite all of the aid provided, we estimate that it is covering roughly 35% of the total loss for cotton and soybeans and roughly 45% of the loss for corn and wheat. In other words, farmers have had to shoulder roughly 55% to 65% of the loss on their own over the last 3 years. If nothing else, this should bring into focus the magnitude of the challenge they’ve been facing. Perhaps most daunting: they are facing a situation where the outlook suggests the losses will grow even larger next year.&nbsp;



Table 1. Cumulative Farm Losses for the Major Row Crops, 2023-2025F.



<figure class="wp-block-table aligncenter is-style-stripes has-small-font-size"><table><tbody><tr><td class="has-text-align-left" data-align="left">2023-2025F Cumulative Totals</td><td class="has-text-align-center" data-align="center">Corn</td><td class="has-text-align-center" data-align="center">Soybeans</td><td class="has-text-align-center" data-align="center">Wheat</td><td class="has-text-align-center" data-align="center">Cotton</td></tr><tr><td>Total Revenue ($/ac)</td><td class="has-text-align-center" data-align="center">2,333.29</td><td class="has-text-align-center" data-align="center">1,675.04</td><td class="has-text-align-center" data-align="center">883.67</td><td class="has-text-align-center" data-align="center">1,760.67</td></tr><tr><td>Total Cost ($/ac)&nbsp;&nbsp;a/</td><td class="has-text-align-center" data-align="center">2,677.12</td><td class="has-text-align-center" data-align="center">1,971.53</td><td class="has-text-align-center" data-align="center">1,183.80</td><td class="has-text-align-center" data-align="center">2,797.21</td></tr><tr><td class="has-text-align-left" data-align="left">Net Returns ($/ac)</td><td class="has-text-align-center" data-align="center">-343.83</td><td class="has-text-align-center" data-align="center">-296.49</td><td class="has-text-align-center" data-align="center">-300.13</td><td class="has-text-align-center" data-align="center">-1,036.54</td></tr><tr><td>&nbsp;</td><td class="has-text-align-center" data-align="center">&nbsp;</td><td class="has-text-align-center" data-align="center">&nbsp;</td><td class="has-text-align-center" data-align="center">&nbsp;</td><td class="has-text-align-center" data-align="center">&nbsp;</td></tr><tr><td class="has-text-align-left" data-align="left">ARC/PLC ($/ac) – 2023-24 Crop Years</td><td class="has-text-align-center" data-align="center">10.98</td><td class="has-text-align-center" data-align="center">10.50</td><td class="has-text-align-center" data-align="center">4.94</td><td class="has-text-align-center" data-align="center">30.72</td></tr><tr><td class="has-text-align-left" data-align="left">ARC/PLC ($/ac) – 2025 Crop Year&nbsp;b/</td><td class="has-text-align-center" data-align="center">65.66</td><td class="has-text-align-center" data-align="center">28.97</td><td class="has-text-align-center" data-align="center">54.52</td><td class="has-text-align-center" data-align="center">133.05</td></tr><tr><td class="has-text-align-left" data-align="left">ECAP ($/ac) – 2024 Crop Year</td><td class="has-text-align-center" data-align="center">42.91</td><td class="has-text-align-center" data-align="center">29.76</td><td class="has-text-align-center" data-align="center">30.69</td><td class="has-text-align-center" data-align="center">84.74</td></tr><tr><td class="has-text-align-left" data-align="left">FBA ($/ac) – 2025 Crop Year</td><td class="has-text-align-center" data-align="center">44.36</td><td class="has-text-align-center" data-align="center">30.88</td><td class="has-text-align-center" data-align="center">39.35</td><td class="has-text-align-center" data-align="center">117.35</td></tr><tr><td class="has-text-align-left" data-align="left">Total Farm Bill &amp; Ad Hoc Assistance ($/ac)</td><td class="has-text-align-center" data-align="center">163.91</td><td class="has-text-align-center" data-align="center">100.11</td><td class="has-text-align-center" data-align="center">129.50</td><td class="has-text-align-center" data-align="center">365.86</td></tr><tr><td>&nbsp;</td><td>&nbsp;</td><td>&nbsp;</td><td>&nbsp;</td><td>&nbsp;</td></tr><tr><td>Share of Loss Covered by Aid</td><td class="has-text-align-center" data-align="center">48%</td><td class="has-text-align-center" data-align="center">34%</td><td class="has-text-align-center" data-align="center">43%</td><td class="has-text-align-center" data-align="center">35%</td></tr></tbody></table></figure>



Figure 1. Share of Cumulative Farm Losses for the Major Row Crops Covered by Federal Assistance and Borne by Producers, 2023-2025F.



<figure class="wp-block-image aligncenter size-full"><img loading="lazy" decoding="async" width="2560" height="1085" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.4f1-scaled.png" alt="" class="wp-image-43398" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.4f1-scaled.png 2560w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.4f1-1024x434.png 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.4f1-768x325.png 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.4f1-1536x651.png 1536w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.4f1-2048x868.png 2048w" sizes="auto, (max-width: 2560px) 100vw, 2560px" /></figure>



Now, for a couple of technical points. First, some may ask why we didn’t include crop insurance indemnities or natural disaster aid (think the Supplemental Disaster Relief Program) in our analysis. The reason: our total revenue estimates in Table 1 use marketing year average prices and harvested yields. Our assumption is that any crop insurance indemnities or disaster aid payments simply help partially restore producer revenue. As a result, total revenue is an appropriate proxy. Second, some may ask why we focused only on the 4 major row crops with more than 10 million base acres. The primary reasons for this were that the ARC/PLC average payments are very sensitive to acreage assumed, and there is a significant difference between base and planted acreage for these smaller-acreage crops. While that will likely change with the new addition of base acres in the One Big Beautiful Bill, it remains a limitation for analyzing the 2023-2025 period that would likely skew our results. Further, for some of the smaller-acreage crops, payment limits are significantly binding. Without a reliable way to incorporate the effects of payment limits into this analysis, the estimated payments would be significantly over-stated. While some of these challenges also impact the major row crops, in our opinion, they are less pronounced. So, while we may follow up on this analysis in the future, for today we focused on the 4 major row crops.



Bottom line: for the major row crops, while the federal government has provided a significant amount of assistance, farmers are shouldering even more of the loss, and they are facing a growing season in 2026 that may well compound the loss even more. In dealing with the uncovered losses already incurred, producers have only so many options: (1) watch their equity erode in proportion to the losses they’ve faced; (2) to the extent that equity is gone they can [try to] borrow money to cover the losses; or (3) they go out of business. They are going through that mental math while also trying to cash flow the upcoming year.



One final point: we appreciate more than most the difficulty of getting anything done in Washington, D.C.&nbsp;&nbsp;We also encounter producers every day who are very grateful that policymakers have stepped up to the plate to help keep them on their farms during these very trying times. But, we’d be remiss if we didn’t also note that over the last 3 years, as a nation,&nbsp;&nbsp;we’ve essentially been asking farmers to put their livelihoods on the line – with very little hope for profits – to keep raising food and fiber…while hoping that the federal government will deliver relief at the 11th&nbsp;hour to help keep them there.&nbsp;&nbsp;One of us is married to a rocket scientist…but it doesn’t take a rocket scientist to know this isn’t sustainable.



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Fischer, Bart L., and Joe Outlaw. &#8220;I<a href="https://southernagtoday.org/2026/02/05/is-more-bridge-assistance-really-needed/">s More Bridge Assistance Really Needed?</a>&#8221; Southern Ag Today 6(6.4). February 5, 2026. <a href="https://southernagtoday.org/2026/02/05/is-more-bridge-assistance-really-needed/">Permalink</a>

Is More Bridge Assistance Really Needed?

Commodity prices are influenced by a wide range of factors, but seasonal patterns remain an important consideration for crop marketing decisions. Even in periods of heightened volatility, understanding how prices tend to behave at different points in the marketing year can help producers evaluate timing risk and opportunity. Using soybeans as an example, this article examines historical price seasonality to illustrate how these recurring patterns can inform marketing strategies.



Seasonality reflects the tendency for prices to follow recurring patterns throughout the marketing year, largely driven by changes in supply availability. Across crops, prices are often weakest near harvest, when supplies are most abundant, and strengthen later in the year as stocks are drawn down. While this pattern is widely understood, it is not universal. In some years, crop prices are stronger at harvest than during the remainder of the marketing year; however, these “harvest-strong” years are relatively rare and tend to behave differently than the typical seasonal pattern.



Figure 1 illustrates soybean cash price seasonality using national monthly prices from 2010–2025. Prices are expressed as an index, calculated by dividing each month’s price by that marketing year’s average price. A value of 100 represents the average price for the year, while values above (below) 100 indicate prices that were higher (lower) than average.



The thick black line in Figure 1 shows the average seasonal pattern across all years. This long-run average confirms a familiar story: soybean prices tend to be relatively weaker in the early fall, strengthen through winter and spring, and often peak in late spring or early summer before declining as new-crop supplies approach. From a seasonal perspective, this pattern suggests that pre-harvest and late-spring marketing opportunities often outperform harvest-time sales.



Not all years follow this average path. The green lines in Figure 1 highlight harvest-strong years—marketing years in which average soybean prices during harvest (September–November) were higher than prices during the remainder of the marketing year. The lighter gray lines represent all other years. Over the past 15 years, soybean prices were higher at harvest in only three years: 2015, 2019, and 2024. In 2015, harvest prices were supported by weather risk and relatively tight global balance sheets. In 2019, prices were influenced by trade uncertainty and a delayed supply response. Most recently, in 2024, tight stocks and global supply concerns helped support prices at harvest. In contrast, the remaining years exhibit stronger pricing opportunities outside the harvest window.



This distinction has practical marketing implications. In most years, weak harvest prices are followed by some degree of seasonal recovery, making post-harvest marketing opportunities more attractive. When prices are unusually strong at harvest, however, the historical record suggests that price upside later in the marketing year may be more limited.



The key takeaway is not that producers should market at the same time every year, but that seasonality provides a useful baseline expectation. When prices align with typical seasonal patterns, historical averages can help frame marketing decisions. When prices deviate, particularly when harvest prices are strong, it may signal that capturing favorable prices sooner deserves consideration. Incorporating seasonal patterns alongside market fundamentals, risk tolerance, and cash-flow needs can help producers make more disciplined and informed soybean marketing decisions.



Figure 1.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1958" height="1445" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.3.png" alt="" class="wp-image-43395" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.3.png 1958w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.3-1024x756.png 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.3-768x567.png 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.3-1536x1134.png 1536w" sizes="auto, (max-width: 1958px) 100vw, 1958px" /></figure>



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Gardner, Grant. &#8220;<a href="https://southernagtoday.org/2026/01/22/price-seasonality-what-the-pattern-shows/">Price Seasonality: What the Pattern Shows.</a>&#8221; Southern Ag Today 6(6.3). February 4, 2026. <a href="http://price-seasonality-what-the-pattern-shows">Permalink</a>

Price Seasonality: What the Pattern Shows

USDA released the Cattle inventory survey on Friday, January 30th.&nbsp;&nbsp;We’ve included some thoughts on the report from a few of our Southern Ag Today Livestock Economists.



Kenny Burdine, University of Kentucky.  



In a word – bullish! The 1% decrease in beef cow inventory surprised me. With beef cow slaughter down by over 500,000 head in 2025, I expected beef cow numbers to be up slightly coming into 2026. At 27.6 million cows, the US beef herd is still at its lowest level since 1961.



Heifers held for beef cow replacement were estimated at a little over 4.7 million head, which is up 0.9% from last year. I like to consider this number as a percent of beef cow inventory, which would be 17.1%. This is below the long run average, but higher than each of the last 3 January reports.



The 2% increase in dairy cow inventory is also noteworthy. 2024 was a very good year in the dairy sector and cow numbers seemed slow to respond. However, monthly estimates started rising steadily during 2025 and that was reflected in this January 1 number. While milk prices have fallen sharply over the last 12 months, that is likely being offset by strong values for beef-sired dairy calves.



KY beef cow inventory was estimated down another 7,000 (-0.8%) head this year. This is the lowest beef cow numbers have been in the Commonwealth since the 1960’s. In addition to production costs, female values (weaned heifers and cull cows), and interest rates, expansion of the Kentucky cowherd is further constrained by limited pasture availability. A lot of pasture ground was converted to row crops over the last couple of decades.



Andrew Griffith, University of Tennessee.  



NASS January 1, 2026 cattle inventory did not perfectly align with industry expert expectations. Frankly, I thought industry experts were a little too ambitious with their numbers before the release of cattle inventory estimates. I am a little surprised more heifers were retained for beef cow replacement than a year ago, but then again, a year ago was a relatively low quantity of animals. As it relates to Tennessee, the values look in line with what was expected, which was a decline in beef cow numbers and heifers held for replacement. Three consecutive Falls have brought drought to Tennessee, which puts a damper on heifer retention.



Hannah Baker, University of Florida.  



Some small revisions to the 2025 survey were noted.  Revisions to the 2025 data reduced total cattle and calf inventory by 190,000 head, while beef cow numbers increased by 28,500 head. After these revisions, cattle and calf inventory declined by less than 1%, with beef cow numbers down 1% heading into 2026. In Florida however, total cattle inventory increased by 1.3% (20,000 head), with beef cow numbers up 7,000 head (0.8%) and dairy cow numbers up 3,000 head (3.1%). Following a 3,000-head increase in 2025, Florida beef producers appear to be moving toward herd stabilization. Heifers held for beef replacement remained unchanged at 115,000 head. Prolonged statewide drought conditions, recent freezing temperatures, and high calf prices will certainly influence decisions regarding more significant heifer retention in 2026.



Max Runge and Ken Kelley, Auburn University.  



Total cattle and calves in Alabama increased slightly for a second consecutive year, even as portions of the state experienced drought. Beef cows that have calved were essentially unchanged from a year ago, while beef replacement heifer numbers increased modestly. At this point, these changes appear to reflect herd stability rather than clear evidence of expansion, and it remains too early to determine whether producers are beginning a broader rebuilding phase.



Will Secor, University of Georgia. 



The USDA Cattle report&#8217;s headline all cattle and calves inventory was not totally surprising; it showed a slight reduction. However, digging into some of the details reveals interesting shifts. The most interesting national number to me was seeing that the number of beef replacement heifers increased. This is a sign that producers are starting to re-build or at least slow the pace of liquidation. For Georgia, all cattle and calves dropped by around one percent, largely driven by beef cow numbers dropping by around three percent. Milk cow numbers offset those beef cow declines partially, as these increased by five percent. Finally, Georgia&#8217;s 2025 calf crop rose by two percent compared to 2024. This higher calf crop came from fewer cows in 2025 compared to 2024 &#8211; a potential indication of improved reproductive efficiency for operations in the state. 



David Anderson, Texas A&amp;M.  



Fewer beef cows but more beef cow replacements, up 50,000 head to 650,000, were noted in the Texas inventory data.  Way in the back of the report was the annual estimate of the number of stocker cattle on small grain pastures (wheat, oats, etc.) in Texas, Oklahoma, and Kansas.  The report indicated 180,000 more stockers, up 12 percent, than a year ago.  That’s interesting given the drought that hurt pasture development, relatively few cattle available, and high prices. 



Josh Maples, Mississippi State University. 



This report sets up 2026 as another year of tight supplies and provides support for strong prices. The number of heifers held back for beef cow replacements was 4.714 million head, which is a 0.89 percent increase from a year ago. This was on the low end of pre-report estimates. This is the first annual increase in beef heifers in a decade, but still a very low total and not a clear signal of herd expansion. Perhaps this report is a sign of the herd stabilizing as we move into 2026, but more retention will be needed to suggest herd expansion. The bulk of the increased heifer retention occurred in Texas, which added 50,000 heifers for beef cow replacement, while the U.S. overall added 41,700. If more heifer retention occurs in 2026, it will be interesting to track the regional differences in where that growth happens. Total cattle and calves in Mississippi decreased one percent to 800,000 head. 



Overall, fewer beef cows will keep supplies tight and prices high in the coming months and the next couple of years.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1920" height="1440" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-1.jpeg" alt="" class="wp-image-43386" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-1.jpeg 1920w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-1-1024x768.jpeg 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-1-768x576.jpeg 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-1-1536x1152.jpeg 1536w" sizes="auto, (max-width: 1920px) 100vw, 1920px" /></figure>



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1920" height="1440" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-2.jpeg" alt="" class="wp-image-43387" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-2.jpeg 1920w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-2-1024x768.jpeg 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-2-768x576.jpeg 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-2-1536x1152.jpeg 1536w" sizes="auto, (max-width: 1920px) 100vw, 1920px" /></figure>



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="1920" height="1440" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-3.jpeg" alt="" class="wp-image-43388" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-3.jpeg 1920w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-3-1024x768.jpeg 1024w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-3-768x576.jpeg 768w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/02/6.06.2-3-1536x1152.jpeg 1536w" sizes="auto, (max-width: 1920px) 100vw, 1920px" /></figure>

The Cow Herd Shrinks Some More

Although it may be a new year, it brings many old questions, including how the Federal Reserve will manage interest rates in 2026. The Federal Reserve adjusts the federal funds rate, the rate at which banks in the Federal Reserve System lend to one another.&nbsp;&nbsp;Their objective in adjusting rates is to 1) keep inflation low and stable and 2) maintain full employment in the economy. After swiftly raising the federal funds rate in 2022 to combat inflation, the Federal Reserve began lowering its target rate slowly in the second half of 2024. The federal funds rate held steady for most of 2025; however, the Federal Open Market Committee (FOMC), the group within the Federal Reserve that sets interest rates, resumed rate cuts at its September meeting. The FOMC implemented additional cuts at its next two meetings in October and December.



Additionally, at the December meeting, the FOMC released its latest economic projections and monetary policy expectations. These projections summarize the views of the thirteen FOMC members on economic growth, unemployment, and inflation, as well as their views on appropriate monetary policy in both the short and long term. Table 1 summarizes FOMC members’ projections for 2026. While FOMC members largely agree on how the economy will perform this year, they differ on how the federal funds rate should change.



Table 1. 2026 Economic Projections of FOMC Members as of December 30, 2025



<figure class="wp-block-table has-small-font-size"><table><tbody><tr><td>&nbsp;</td><td class="has-text-align-center" data-align="center">Median (%)</td><td class="has-text-align-center" data-align="center">Central Tendency (%)1</td><td class="has-text-align-center" data-align="center">Range (%)</td></tr><tr><td>Change in Real GDP</td><td class="has-text-align-center" data-align="center">2.3</td><td class="has-text-align-center" data-align="center">2.1 &#8211; 2.5</td><td class="has-text-align-center" data-align="center">2.0 &#8211; 2.6</td></tr><tr><td>Unemployment Rate</td><td class="has-text-align-center" data-align="center">4.4</td><td class="has-text-align-center" data-align="center">4.3 &#8211; 4.4</td><td class="has-text-align-center" data-align="center">4.2 &#8211; 4.6</td></tr><tr><td>PCE Inflation</td><td class="has-text-align-center" data-align="center">2.4</td><td class="has-text-align-center" data-align="center">2.3 &#8211; 2.5</td><td class="has-text-align-center" data-align="center">2.2 &#8211; 2.7</td></tr><tr><td>Federal Funds Rate</td><td class="has-text-align-center" data-align="center">3.4</td><td class="has-text-align-center" data-align="center">2.9 &#8211; 3.6</td><td class="has-text-align-center" data-align="center">2.1 &#8211; 3.9</td></tr></tbody></table><figcaption class="wp-element-caption">1&nbsp;The central tendency represents the range of projections, excluding the 3 highest and 3 lowest values.</figcaption></figure>



How the FOMC manages the federal funds rate in 2026 will depend on how inflation and unemployment change. All else equal, if inflation rises again, the FOMC is more likely to maintain or raise the federal funds rate. On the other hand, if unemployment increases, the FOMC is likely to lower the federal funds rate and may do so more rapidly than it currently plans. If we take the FOMC’s median projection as its most likely course of action, we expect the FOMC to make a single quarter-point cut to the federal funds rate in 2026. While it may implement this cut early in 2026, during its January or March meeting, it&#8217;s more likely that a single cut would occur in the third or fourth quarter of 2026. This would imply a 3.5-3.75 percent federal funds rate to start the year, with a cut to 3.25-3.5 percent at some point between June and December.



Figure 1 uses data from the Dallas Federal Reserve’s Agricultural Survey to illustrate how the FOMC’s actions affect agricultural lending rates. Ag lending rates tend to move with the federal funds rate and are about 4-5 percentage points higher on average. If this relationship continues, a single quarter-point cut would imply average ag lending rates in the Dallas Federal Reserve District in the mid-to-upper 7 percent range for operating loans and in the low-to-mid 7 percent range for intermediate and real estate loans. However, the actual rate a borrower receives will depend on their relationship with the lender and their perceived creditworthiness.



Figure 1. Agricultural Lending Rates by type and the Federal Funds Rate, 2022-2025



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="945" height="575" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/01/6.06.1.png" alt="" class="wp-image-43371" srcset="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/01/6.06.1.png 945w, https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/01/6.06.1-768x467.png 768w" sizes="auto, (max-width: 945px) 100vw, 945px" /></figure>



References



Board of Governors of the Federal Reserve System (US), Federal Funds Effective Rate [FEDFUNDS], retrieved from FRED, Federal Reserve Bank of St. Louis;&nbsp;<a href="https://fred.stlouisfed.org/series/FEDFUNDS">https://fred.stlouisfed.org/series/FEDFUNDS</a>.



Board of Governors of the Federal Reserve System (US), Agricultural Survey, retrieved from the Federal Reserve Bank of Dallas;&nbsp;<a href="https://www.dallasfed.org/research/surveys/agsurvey">https://www.dallasfed.org/research/surveys/agsurvey</a>.



Board of Governors of the Federal Reserve System (US), December 30, 2025: FOMC Projections Materials, Accessible Version.&nbsp;&nbsp;Retrieved from:&nbsp;<a href="https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20251210.htm">https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20251210.htm</a>.



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&nbsp;Wright, Andrew. &#8220;T<a href="https://southernagtoday.org/2026/01/22/the-outlook-for-interest-rates-in-2026/">he Outlook for Interest Rates in 2026.</a>&#8221; Southern Ag Today 6(6.1). February 2, 2026. <a href="https://southernagtoday.org/2026/01/22/the-outlook-for-interest-rates-in-2026/">Permalink</a>

The Outlook for Interest Rates in 2026

The&nbsp;<a href="https://environment.ec.europa.eu/topics/forests/deforestation/regulation-deforestation-free-products_en">European Deforestation Regulation</a>&nbsp;(EUDR) has been postponed once again for another calendar year, but effects of the regulation are already being seen with Southern agricultural and timber lands. Forestland owners in the south are being told&nbsp;they may need to sign an attestation stating they will not convert their timberland to pasture or row crop production after timber is harvested. Failure to sign the attestation may bar a landowner from selling their timber if that product could end up in the European Union (EU). Because many larger timber and paper companies do business with the EU, this regulation could greatly limit the number of potential timber buyers in a geographical area or eliminate them entirely.



The EUDR is a regulation passed by the EU back in May 2023. The stated goal of the regulation is to reduce the EU’s&nbsp;impact on global deforestation and degradation by prohibiting the importation into the EU of certain products produced on land deforested or degraded after Dec. 31, 2023.



The products of importance to southern agriculture consist of wood, cattle, and soybeans. Companies importing these goods to the EU will need to certify that their products do not contribute to deforestation or degradation of forested lands.&nbsp;&nbsp;Companies that are in violation of the new regulation are subject to potentially stiff financial penalties, including confiscation of the product being sold, up to 12 months of exclusion from the EU public procurement process, and fines up to 4% of the company’s total annual EU turnover from the preceding year after the fine is assessed. With penalties this large at stake, companies are looking for ways to comply with the EUDR, and the burden is being shared with southern landowners.&nbsp;



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Rumley, Rusty. &#8220;<a href="https://southernagtoday.org/2026/01/22/the-european-deforestation-regulation-and-the-impact-on-southern-agriculture/">The European Deforestation Regulation and the Impact on Southern Agriculture.</a>&#8221; Southern Ag Today 6(5.5). January 30, 2026. <a href="https://southernagtoday.org/2026/01/22/the-european-deforestation-regulation-and-the-impact-on-southern-agriculture/">Permalink</a>

The European Deforestation Regulation and the Impact on Southern Agriculture

A substantial share of U.S. agricultural production is sold overseas (Figure 1). Exchange rates, therefore, play a central role in export competitiveness and, indirectly, in domestic price prospects. For crops with heavy export exposure, the value of the dollar is not just a macroeconomic headline; it is part of the demand curve faced by Southern producers.



The economic intuition is straightforward. Most globally traded agricultural commodities are priced in U.S. dollars. When the dollar strengthens, foreign buyers must use more local currency to purchase the same dollar-priced commodity, which tends to soften demand at the margin and place downward pressure on prices. When the dollar weakens, U.S. supplies become cheaper in foreign-currency terms, export bids often improve, and U.S. crops become easier to place in global markets. This helps explain why the dollar and broad commodity prices frequently move in opposite directions, even though exchange-rate effects can be offset by other market forces.



In 2025, the exchange-rate environment turned more supportive for U.S. agriculture. After rising 7.1 percent in 2024, the nominal broad dollar index declined 7.2 percent over 2025 (Figure 2). Over the same period, major U.S. agricultural customers experienced notable currency appreciation against the dollar: the euro strengthened 12.6 percent, and the Mexican peso appreciated 12.7 percent (Figure 3). These movements improved foreign purchasing power for U.S. shipments and helped support U.S. crop exports. At the same time, Brazil’s real appreciated by roughly 11 percent, which can tighten Brazilian exporters’ local-currency margins and reduce their ability to price aggressively, all else equal.



Empirical research supports this channel. Shane et al. (2008) find that a 1 percent decline in the trade-weighted dollar is associated with roughly a 0.5 percent increase in the value of U.S. agricultural exports. Exchange rates, however, rarely operate in isolation. Weather outcomes, yields, freight costs, geopolitics, and policy shocks can dominate price formation in the short run (an important lesson from the post-2022 period).



For Southern producers, the dollar’s decline in 2025 is a constructive signal for export-oriented crops because it supports international competitiveness without requiring lower farm-gate prices. The main limitation is timing: exchange-rate effects pass through bids, basis, and contracting practices unevenly, so benefits can vary across regions and marketing windows. Even so, the directional effect is favorable.&nbsp;



If global conditions remain orderly and U.S. interest rates drift lower, the dollar may stay softer and continue to support the export channel; renewed risk aversion, however, could reverse this trend and reintroduce headwinds. For export-dependent Southern crops, monitoring exchange-rate conditions alongside basis and contract timing remains an essential part of marketing discipline.



Figure 1 – Exports account for a large share of output in several U.S. crops



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="624" height="316" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/01/6.05.4-1.jpg" alt="" class="wp-image-43380"/><figcaption class="wp-element-caption">Note: Export share is calculated as exports divided by total production. Estimates correspond to USDA 2025/26 marketing-year projections released in January 2025. Source: U.S. Department of Agriculture, World Agricultural Supply and Demand Estimates (WASDE), January 2025</figcaption></figure>



Figure 2 – The U.S. dollar declined in 2025



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="624" height="276" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/01/6.05.4-2.jpg" alt="" class="wp-image-43381"/><figcaption class="wp-element-caption">Note: Nominal Broad U.S. Dollar Index, Index 2025-01-02=100, Daily, Not Seasonally Adjusted. A decline indicates a broad-based depreciation of the U.S. dollar against major trading partners. Source: Federal Reserve Bank of St. Louis (FRED): DTWEXBGS</figcaption></figure>



Figure 3 &#8211; U.S. dollar weakened against key agricultural trading partners in 2025



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="624" height="348" src="https://sat-wp.afpc.tamu.edu/wp-content/uploads/2026/01/6.05.4-3.jpg" alt="" class="wp-image-43382"/><figcaption class="wp-element-caption">Note: Percent change over 2025 (end-to-end). Exchange rates are expressed as local currency per U.S. dollar (Negative values indicate a weaker U.S. dollar). Source: Federal Reserve Bank of St. Louis (FRED): DEXBZUS, DEXCHUS, DEXMXUS, DEXCAUS, DEXJPUS, DEXUSEU. For the Euro, we convert FRED’s DEXUSEU (USD per EUR) to EUR per USD as 1/DEXUSEU</figcaption></figure>



References



Federal Reserve Bank of St. Louis. (2026).&nbsp;Federal Reserve Economic Data. FRED.&nbsp;<a href="https://fred.stlouisfed.org/">https://fred.stlouisfed.org/</a>. Accessed January 23, 2026



Shane, M., Roe, T. L., &amp; Somwaru, A. (2008). Exchange rates, foreign income, and U.S. agricultural exports.&nbsp;Agricultural and Resource Economics Review, 37(2).&nbsp;<a href="https://ageconsearch.umn.edu/record/45666/files/shane%20-%20current.pdf">https://ageconsearch.umn.edu/record/45666/files/shane%20-%20current.pdf</a>



U.S. Department of Agriculture, Office of the Chief Economist. (2025, January).&nbsp;World Agricultural Supply and Demand Estimates (WASDE).&nbsp;<a href="https://www.usda.gov/oce/commodity/wasde">https://www.usda.gov/oce/commodity/wasde</a>. Accessed January 23, 2026.



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Clemets Daglia Calil, Yuri. &#8220;<a href="https://southernagtoday.org/2026/01/22/a-weaker-dollar-can-be-good-news-for-u-s-crop-exports/">A Weaker Dollar Can be Good News for U.S. Crop Exports.</a>&#8221; Southern Ag Today 6(5.4). January 29, 2026. <a href="https://southernagtoday.org/2026/01/22/a-weaker-dollar-can-be-good-news-for-u-s-crop-exports/">Permalink</a>

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