Uncertainties abound for corn and soybean production in 2013. Potential drought, crop insurance payouts, and commodity prices are just a few major unknowns. To help growers prepare for the next year, Farm Industry News put together a buyer’s forecast of interest rates and the costs of production inputs and land. Featured here is the 2013 forecast for interest rates.
The rest of the input forecasts may be found here:
The current low interest rates should remain low through 2013 and possibly through 2014, according Purdue University agricultural economist Mike Boehlje. He says the U.S. Federal Reserve is keeping interest rates artificially low to stimulate an economic recovery.
“Ben Bernanke has said he will continue to keep interest rates low even until 2015,” Boehlje explains. “That is a pretty good indication we will probably have interest rates at this level for the next year.
“Now, Bernanke didn’t promise this; he just said it’s what he was planning to do,” Boehlje continues. “So if we get a stronger recovery, or see extensive inflationary pressure of some form, Bernanke could clearly change his mind. But we don’t anticipate either one of those occurring.”
Interest rates after 2014 are more of a concern, according to Sterling Liddel, vice president Rabo AgriFinance. “It is very hard to anticipate interest rates staying as low as they are long term,” he says. “An increase in interest rates would pressure land values down.”