Harvest is wrapping up, calves are being weaned, the weather is turning, and kids have returned to school. Time has flown by, and despite concerns about drought earlier this year, conditions have improved for many, leading to higher productivity. However, uncertainty in the markets has created heightened volatility.

There are tools to help mitigate this risk through various insurance and commodity marketing strategies. The best options will vary based on the unique circumstances of each operation. We encourage producers to formulate plans for the upcoming year and set clear goals for their operations. This forward-thinking approach provides focus and direction, which can be highly beneficial when making decisions with both short- and long-term impacts.

Soon, we will review how each operation has performed throughout 2025. We understand the challenges the industry faces and strive to be a partner in positioning your operation for success. Our goal is to develop a sound understanding of your needs and assist you in making informed, business-driven decisions.

Grain Sector

The grain sector has been directly impacted by fundamental, technical, and trade policies. Costs of production remain elevated, resulting in higher breakeven prices. Analysts expect increased production levels, which must be matched by higher demand. This comes at a time when agricultural products have been caught in the crosshairs of trade relations. Domestic demand and new trade partners will need to be identified to avoid larger carryout figures and higher stocks-to-use ratios.

South America—particularly Brazil—is forecasting greater corn consumption, which may limit its export potential moving forward. Feed usage is expected to grow with cautious optimism in the livestock sectors. Additionally, biofuel and ethanol consumption is likely to increase, which would be favorable from a demand perspective. Blended fuels may also play a role in trade deals as we seek new partners globally. The USMCA is up for review, and Canada remains our largest partner in ethanol exports. Lastly, all eyes will be on upcoming reports to verify the accuracy of previous production estimates.

Soybean Complex

China has shifted toward more favorable policies with South American partners. Historically, China has accounted for about one-quarter of U.S. soybean exports. While China remains a top producer in the pork industry, there appears to be a reduction in sows and weights as pork demand declines. This will be an ongoing challenge and likely a difficult void to fill.

Livestock

Domestically, tighter pork supplies and lower feed costs have created more profitable conditions. Export demand remains steady. While the sow herd has been reduced, productivity and efficiencies have improved thanks to better sow performance, enhanced biosecurity, genetics, and feeding practices. Slaughter numbers are lower year-over-year, partly due to PRRS earlier in 2025. Producers remain cautious about expansion, with total inventories down compared to last year.

Dairy

The dairy sector has experienced a decline in milk prices as production remains strong and continues to outpace demand. Some relief has come from robust values for beef-cross calves and strong cull cow prices. Genetic improvements, herd diversification, and better management have created a surplus in fat content, which was previously encouraged. Meanwhile, whey and protein markets have shown significant demand despite pressure on butter, cheese, and dry milk prices.

Beef

The beef sector continues to tighten on the supply side, driving an incredible run in the markets. Volatility has increased as headlines raise uncertainty about beef imports from outside the U.S. Consumers remain resilient, with beef still the preferred protein. While herd size has not entered an expansionary phase, finished cattle weights have trended upward. Markets may be showing signs of top-line resistance, but this will be tested if demand holds. Elevated hay and feed production levels have provided some relief in feed costs, improving breakeven estimates.

Looking Ahead

We look forward to meeting with you in the coming months to develop and discuss plans for risk mitigation and assess your individual financial strategies. First Bank & Trust is incredibly thankful for the opportunity to work with so many great producers, and we wish you and your families all the best as you enter the holiday season.