Ep. 102 2026 Outlook: The Good, The Bad, and The Ugly
Recently AgCredit co-hosted a Market Outlook meeting in Bowling Green and we had a chance to get some insights from the speakers. In this episode we get a market outlook from Neil Schuller of The Andersons, an update on land values from Howard Halderman of Halderman Real Estate & Farm Management, and Scott Parker from AgCredit shares his insights on interest rates.
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Speaker 1 (00:08):Welcome to AgCredit Said It, your go- to podcast for insights on farm finance and maximizing your return on investment. Join us as we talk to industry leaders, financial experts, and area farmers, bringing you skillful advice and strategies to grow your farm's financial future. AgCredit Said It, where Farm Finance goes beyond the balance sheet.
Kendra Heffelfinger (00:38):This is Kendra Heffelfinger with another episode of AgCredit Said It and with us today, we have Neil Schuller, head of grower solutions at the Andersons, and just recently participated in a market outlook that we held in Bowling Green, and just wanted to catch his opinion of a few things as we roll through 2026. Neil, welcome, and thank you for being with us.
Neil Schuller (00:56):Thanks, Kendra. Appreciate it. As always.
Kendra Heffelfinger (00:59):And presentation was the good, the bad, and the ugly.
Neil Schuller (01:02):Yes.
Kendra Heffelfinger (01:02):Can you tell us a little bit more as to why that title?
Neil Schuller (01:05):Yeah. It's interesting when you get this time of year, you always try to kind of frame things in, and obviously producers are faced with a lot right now on the bad side of things. We have a huge crop that we just harvested here in the US or record crop on all sides. But on the good side, our export markets have been on fire. So we are seeing that liquidate through the system. Ugly part of it is globally, we're just in a supply glut right now, and it's going to make things really, really hard and challenging as we kind of move through 26 with the world being fairly supplied across the board. I think that values could get pretty tight for producers going forward this year.
Kendra Heffelfinger (01:44):Yeah. One of the things that you mentioned in your presentation was the funnel and everybody's dumping that corn into the funnel and where it comes out at the end of the day, as far as that demand is going to be key for us going forward in 2026.
Neil Schuller (01:54):Correct. And right now, we're seeing exports in the US up 30% year over year. And last year was a tremendous export year, but we're the cheapest corn in the world in the US right now. So maintaining that competitive advantage is going to be key as we kind of move through the year here to make sure that we've got space in the network for harvest that's yet to come.
Kendra Heffelfinger (02:14):And with that, what can producers do to protect themselves in this kind of a
Neil Schuller (02:19):Market? Yeah, really good point. And I think the first thing is, is just a realization of what we're faced with right now and understanding that the playbook that worked for you in 2022, 23 is not the same playbook. We need to get back into the 18, 19 years like that where we're in a range mound type market. I think it's really important to understand your numbers first and foremost. Get really granular on where your break evens are, your cost of production. The other thing too, with the export pay staying so firm, pay attention to where those markets are around you that might not be your traditional markets, but widen your geography a little bit on where there might be some market opportunities for you. Another thing I think is going to be critical this year is, and we're right in the middle of the season now, is really having a good discussion with your crop insurance agent and understanding there's been a lot changed with the one big beautiful bill that passed this last year in that space and just understanding what's available on the crop insurance front and how you might want to change that up some.
Kendra Heffelfinger (03:19):Yeah. We were looking at that with our own policy holders through ag credit. And one of the things is the subsidies that they've put into it, right?
Neil Schuller (03:24):100%.
Kendra Heffelfinger (03:24):So governments increased that. So also change some of the product lines a little bit. So it might be productive for them to look at upping their coverages for
Neil Schuller (03:34):That same price. Yeah. And I think it's one of those things, there's a lot of times where crop insurance and the cycle of that just becomes kind of a rinse and repeat and just kind of keep things status quo. And this is a year you mentioned a higher level of subsidies, some of the additional products that are available out there, some, I call them additives, if you will, to your base policies that could really make an impact to your bottom line this year. And I think it's really, if you haven't dusted that off in a few years, this would be the year to really have a good meeting with that crop insurance agent on that.
Kendra Heffelfinger (04:03):Yeah. I know one of the other things you mentioned too was volatility as your friend sees the opportunity. So volatility is not always a bad
Neil Schuller (04:10):Thing. Not at all. And we're right in the middle, well, very early on of a big reporting cycle with USDA reports between now and June, really. Almost every month, we've got some pretty key reports that are coming on and those reports can create upward volatility as well. So volatility created by shortages on a vessel load or a train load or something on the basis side, volatility and futures with geopolitical announcements, things of that nature, legislation that could be coming down the way. So we got to not think of volatility only in a negative, but there are positive outcomes as well, but you have to stay tuned into that because with the size of the crop that we have, opportunities can come and go very, very quickly.
Kendra Heffelfinger (04:51):Well, and that just goes back to knowing your production levels, right? If you know where your breakeven is, you know that volatility opportunity.
Neil Schuller (04:58):Absolutely. And understanding that a penny over breakeven by definition is a profitable sale, and we want to make sure that we really separate in a year like this, profit from price. And those are two different things. So I think that most producers have a price in mind that they would like to sell at, but make sure that that lines up from a profitability standpoint as well.
Kendra Heffelfinger (05:21):And I think you said don't trip over dimes chasing pennies,
Neil Schuller (05:24):Right? Yeah. Yeah. Yeah. Don't trip over dimes chasing pennies. In other words, like when you do that work and really understand where your target levels are, so common for producers in a rallying market to reset kind of their paradigm of what price discovery looks like. And that's great, but if you're targeting a value today, let's say 460 corn and that's a good price and you've done your diligence on it, don't not sell when it gets to 460. Have the discipline to stick with that plan.
Kendra Heffelfinger (05:57):First of all, have a plan, right?
Neil Schuller (05:58):Have a plan.
Kendra Heffelfinger (05:58):Absolutely. Everybody has to have a plan this year.
Neil Schuller (06:00):Yeah. And do it right now while you have the time and capacity to do that and really think clearly through it.
Kendra Heffelfinger (06:06):One of the things producers are going to have to look at again this year is just how do they handle their input costs and try to capitalize on opportunities for purchasing power, but also look at what do I pull back on? Can you tell us a little bit about what you're seeing in inputs?
Neil Schuller (06:21):Yeah, that's a great point. Inputs remain volatile for sure. You look at things like urea, Russia's the number one global exporter followed by Iran at number three, and that's a very tense part of the world right now. So prices are staying firm. The other thing too, with the size of the corn crop we had last year, the network, particularly on nitrogen just got completely drained. So prices likely to escalate kind of gradually here through the planting season at least. I would say pay attention to what's going on there, but at the same time, it's going to be hard from a base fertility standpoint to cut back. We still have to produce a crop. We still have to produce a quality crop where I think that that probably gets hit a little bit harder is on some of the spoonfed type nutrients, micros, things along that line where in good economic years, those are things where we're really trying to push yield.
(07:18):I think it's a fallback to like your base fertility package is what we're going to see by and large, but it's going to be tough to skip back too much, including like fungicide passes and things like that. We saw cases last year with southern rust, tar spot, where that can really have an adverse effect on the crop, a huge yield drag. If you get hit with that, at some level, we have to do the base fertility to grow the crop.
Kendra Heffelfinger (07:41):Part of the positive piece of 2026 is there is the good,
Neil Schuller (07:44):Right?
Kendra Heffelfinger (07:45):There are some good things out there. Absolutely. We're seeing maybe some basis that's stabilized, if not increased locally. What does that outlook look like for 2026?
Neil Schuller (07:55):Yeah, right now, particularly like in Northwest Ohio here where a lot of the listeners are, basis levels have held up fairly firm. Crop, we had a dry finish to the crop here, a good crop, but a dry finish to the crop. Basis has stayed pretty firm. I think the bigger picture out west, it's much different. I should sidebar on that. If you go west of the Mississippi, basis levels are all in unders and very, very ... It's getting sloppy out that way. I think given the size of the crop that we're looking at on this last year's crop, and knowing that we've got a whole bunch on farm, 8.7 billion bushels on farm that's going to have to move between now and let's say August, it feels like basis values will get hit as the season goes on. So pay attention to that. If you're looking at your historic basis levels in your market and it looks like, hey, this is good relative to historic numbers, it might be a good idea to lock up some of that basis now just because I feel like that could erode going forward, just given the size of the crop and what all has to move.
Kendra Heffelfinger (08:57):And it still goes back to having that plan. So take a look at what that cost of production is, do that now.
Neil Schuller (09:01):Yep.
Kendra Heffelfinger (09:02):Take a look at what profitability levels are out there,
Neil Schuller (09:04):Right?
Kendra Heffelfinger (09:05):Yes. We don't always want to hit the top. We want to be profitable.
Neil Schuller (09:07):Yes, absolutely. Profit is the key.
Kendra Heffelfinger (09:10):Very good. Well, Neil, I really appreciate your perspective and your time again. And that is Neil Schuller, head of grower solutions at the Andersons. As part of a market outlook in Bowling Green, we have Howard Halderman, third generation and president of Halderman Farm Management and Real Estate. Welcome, Howard.
Howard Halderman (09:25):Great to be here.
Kendra Heffelfinger (09:27):So part of your presentation today was looking at real estate values in 2025, a historical perspective, and maybe what we're looking at going into 2026.
Howard Halderman (09:37):Yeah, we found that 2025 was a very interesting year. Throughout the year, I thought, and many of our staff felt like land values could soften a little bit, and in retrospect, they did not. What we actually found is that on a nominal basis, non-inflation adjusted, 2025 sales for us throughout Ohio, Indiana, and Michigan were at an all time high. Just basically a 90% crop land type of sale metric is what we use. And it was an all time high by $5 a bushel on that calculation. Now, I think if you adjust for inflation, probably not quite as high as 2022, but still on a nominal basis, that's a pretty good number and surprising to us that farmland values went up in spite of some of the challenging commodity prices that we face.
Kendra Heffelfinger (10:27):And with those challenges, what are you guys anticipating for 2026 and beyond in real estate values, that short term?
Howard Halderman (10:34):Yeah, that's going to be a great question. We don't see an overabundance of supply. So if supply is not overburdensome, I'm thinking steady, and maybe there can continue to be some upward trend, but probably steady and stable is really what we're going to see. If you're in an area where not much has sold in the last three or four years, you could still see some surprising numbers on the high side. Likewise, there are some counties where we've had some sales recently where there's been, for whatever reason, quite a few acres sell. And in some of those cases, the land values have been a little mixed, maybe slightly down. So it'll be a mixed market, I believe, but stable on the whole across the corn bell.
Kendra Heffelfinger (11:23):Always in the past, location has been very key to what's driving some of those land values. Are you still seeing that, that location's one of those top pieces that people are looking at?
Howard Halderman (11:31):It is. And I comment on a lot of these seminars that we're in the Eastern Corn Belt and we have this halo effect from the economy that exists in the Ohio and Indiana and Michigan that a lot of states west of here don't. And so location, proximity to Columbus, proximity to Toledo or Cincinnati or Dayton, those locations can have, they have residential expansion, they've got growth of warehouses, industrial, commercial, whatever it is, and that creates 1031 exchange money. That will tend to filter out a county or two from those areas. And so from a location standpoint, if I own farmland within that halo effect of Columbus, let's say, you'll see values skew a little higher than maybe what the productivity might argue for. Now, other locations that become interesting are those with power line access, whether it be for renewable energy, wind and solar, whether it be for data centers that consume a lot of power.
(12:40):If you have properties that are in close proximity to a transmission line that has capacity, that could be attractive from a location value standpoint.
Kendra Heffelfinger (12:50):Yeah. We are seeing that in Northwest High. We've got data centers, we have solar farms, wind farms, right? All of that renewable energy is driving some of those land values. Let's talk about the buyers. Are we seeing investors jump back into this market or are typically we seeing producers yet in this real estate market?
Howard Halderman (13:06):Yeah. Historically speaking, 60 to 70% of your buyers are farmers. It's the guy down the road. Farmers will accept a lower rate of return, cash return on their investment than what the institutional or the investment market will. And the investment market today might be at three and a half or 4%, and the farmer's willing to take two. And you might say, "Well, that doesn't make financial sense." Well, it does to the farmer because it's the chance of a lifetime to buy that farm that he's driven by all his life. And maybe it's close proximity to their headquarters and they're spreading their fixed cost over more acres. The other thing a lot of farmers do is portfolio approach their assets. And so they probably have some farm land they're farming that grandpa bought for $500 an acre. They're acquiring a farm for $15,000 an acre. So on the average, they got what, 7,600 on average invested in the portfolio of those two properties, and at that, it can be an extremely good return.
(14:07):So I think a lot of farmers take that perspective to a degree, but it really is that chance of a lifetime to grow their base operation and then set up the next generation for being able to take over a larger land base.
Kendra Heffelfinger (14:19):And can you talk a little bit about how Halderman's fits into that picture and what you guys do through your management firm?
Howard Halderman (14:24):Yeah. So we offer two or three different services, and it depends on what a client might need. One is property management. So we represent absentee landowners. Those are folks that aren't farming the farm, but they own it. And they say, "Hey, we don't know what current rents should be. We don't know how this cash flex lease might work. Could you help us with capital improvements like tile or irrigation?" And we can come in and step in and be their fiduciary and basically take over all aspects of the farm that they want us to and basically negotiate a lease with a tenant and collect on that lease, make sure it's being well maintained, fertility's being enhanced, hopefully. And that asset appreciates over time as a result of that. We also do farmland brokerage, so we buy and sell farms every day. A lot of our farms are sold at auction, online, but also live auction events, and we do private trees.
(15:16):So we can help people if there's a development situation coming, they have an opportunity to sell for a data center. Not arguing right or wrong on that, but if they have that opportunity, maybe they want to look at doing a 1031 exchange and rolling those dollars into more farmland someplace else. We can probably find that replacement property for them and they can replace the capital and still be invested in farmland. And then the third service area that we offer is appraisal. And so if they're borrowing money or they need an appraisal for a state valuation because one generation's passed on, we can step in and do that appraisal service as well.
Kendra Heffelfinger (15:51):Well then Howard, I thank you for your time today and really appreciate you speaking at our market outlook. And if anybody would like more information, you can always contact Halderman's through via their website.
Howard Halderman (16:00):Yeah, it's www.halderman.com and 800-424-2324 on the phone.
Kendra Heffelfinger (16:06):Very good. Appreciate it, Howard. Welcome back to AgCredit Said It with us. I have Scott Parker, Vice President of Operations with AgCredit. And he was part of our panel today at a Bowling Green market outlook and shared with us that interest rate environment, looking at a historical perspective and what maybe that future holds. So Scott, welcome back to AgCredit Said It.
Scott Parker (16:25):Thanks for having me.
Kendra Heffelfinger (16:26):Really appreciate your insight on interest rates. What can we anticipate coming off of interest rate changes in this last year, what does 2026 look like?
Scott Parker (16:36):Yeah. For 2026, short term interest rates look to be coming down, your operating loans, your equipment loans. We hope to see a half percent to maybe a full percent reduction. Experts are thinking that's going to be more in the second half of 2026, but nonetheless, we feel like those short term rates will be coming down. Inherently, we will see long term rates trend down along with those short term rates, but it won't be step for step. So we may see 25 to 50 basis points drop in long term rates in general between now and end of the year.
Kendra Heffelfinger (17:09):And just like Neil Schuller from the Andersons spoke about input costs and how to capitalize on profitability, looking at those input costs, producers can do the same thing with interest rates. So what's some ways that AgCredit can help with that or producers should be thinking about that interest rate environment and how to adjust?
Scott Parker (17:26):Absolutely. Just like the commodities markets with corn and beans, interest rates have optionality as well. Lots of different products out there to take advantage of whatever the market's telling us. So right now we're coming off a higher interest rate environment because of inflation and that pretty much made all rates closely the same. So your variable rates, your adjustable rates for three or five years and your fully fixed rates were all roughly about the same. Now that we're in a downward rate environment, we're starting to see that yield curve normalize where short term rates are cheaper than long term rates. And like we talked about with 2026 short term rates potentially going further, you can use those products to secure longer term assets, your houses, your farms, and take advantage of that lower rate today as well as any future drops. And as we know, farming's getting tighter and tighter on our margins and any way you can save money, it needs to be looked at.
(18:25):And fortunately, we didn't have to worry about that for 20 some years when we are in a very low interest rate environment, but that's changed. And with the cost of everything being higher, your interest costs are driving a much more bigger expense on your bottom line and any way to reduce that in step with other choices you can make on your personalized farm operation to reduce your costs can add up to a significant amount to help bridge a gap in profitability.
Kendra Heffelfinger (18:53):I think a key piece of that is they need to take a look at their interest rate environment, take a look at what they have on their books already in their debt load and say, "What can I do differently?" Just like we do with commodity prices, you have to have a plan, but that plan needs reviewed. And a lot of times interest rate's one of those things that we don't go back and review. And so what can they do to reach out to their lender, to reach out to ag credit? And what kind of questions should they be asking their lender?
Scott Parker (19:18):Yeah, I think the biggest thing is just to ask your lender, what products do you have and what are the features and benefits of those products? So many options out there today. You go down supermarket aisle, you go car shopping, you're just overwhelmed with options. Do some research ahead of time that could save a lot of back and forth on your discussions, but just ask questions and fully understand the product because a good rate today doesn't mean it's going to be a good rate in the future for every product. So it's very important that you take the time to understand all the features and benefits, both short term and long term.
Kendra Heffelfinger (19:58):Well, Scott, really appreciate your time today, not just in speaking to our group, but also to being part of AgCredit Said It. Thank you.
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