Field Crop Margin Outlook 2018: Sustained Margin Pressure… with Some Exceptions
Rabobank expects sustained margin pressure for field crop farmers in 2018, with the exception of France, Poland, and the UK.
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Field crop farmer margins are under sustained pressure in the US and are somewhat coming under pressure in Brazil. “Field crop farmers are anxiously waiting for a balancing of supply and demand via a contraction of planted acres,” according to Harry Smit, Senior Analyst – Farm Inputs. “The decline in areas witnessed so far was insufficient and partly undone by a rise in yields.” A sufficient contraction of supply, to restore farmgate prices and margins to sustainable levels, has therefore not yet occurred.
Following record production last season, margins for Australian farmers are expected to fall significantly, resulting from dry conditions. In the Netherlands, where potato prices are expected to drop, margins will be substantially lower in 2018 than they were in the past couple of years.
French and Polish farmers will see margins remain at 2017 levels. The UK is one of the few areas where margins are on a growth trajectory, partly due to a weakening of the British pound.