Field Crop Margin Outlook 2019: Sustained Margin Pressure and Increased Uncertainty

Field crop farmer margins are facing sustained pressure worldwide, except in Brazil and the UK, where weaker currencies have contributed to rising local farmgate prices.

Farmer margins in the US recovered slightly in 2018, but are expected to decline again in 2019. The outlook is becoming more uncertain due to rising trade tensions with China, the world’s largest soybean importer. Brazilian farmers are reaping the benefits of this situation because their exports to China remain unhampered.

“In Europe and Australia, yields are the most important factor behind variations in field crop farmer margins,” according to Harry Smit, Farm Inputs Analyst at Rabobank. “With the negative impact of dry conditions putting pressure on 2018 margins in Poland, the Netherlands, and parts of Australia.”

On average, improved prices cannot make up for lower yields. The 2019 outlook for these regions includes a recovery of margins linked to a recovery in yields, but crop prices will not change much. France and the UK were not hit as hard by the dry conditions in Europe, and these countries are seeing firmer margins in 2018 that are likely to maintain in 2019.

  • Harry Smit

    Senior Analyst - Farm Inputs
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  • Stefan van Merrienboer

    Analyst – Grains & Oilseeds
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