U.S. farm incomes will drop by more than half from their peak two years ago, according to U.S. Department of Agriculture estimates issued on Tuesday that signal deeper pain for sellers of agricultural equipment and land.
The USDA projected farm incomes this year will drop by 36 percent from 2014 to $58.3 billion due to declining crop and livestock prices. The forecast is down 20 percent from the USDA's February estimate of $73.6 billion.
Despite the sharp decline, U.S. Agriculture Secretary Tom Vilsack called the forecast "heartening." He noted the United States this year suffered its worst-ever animal disease outbreak with bird flu in poultry, and has grappled with severe drought in the West.
If realized, the decline would bring farm incomes to their lowest level since 2002 when adjusted for inflation, the USDA said. Income will be down about 53 percent from a record high of $123.7 billion in 2013, when crop supplies were tighter.
Corn futures have lost about 30 percent on the Chicago Board of Trade over the past two years following bumper harvests in the Farm Belt, while soybean futures are down about 37 percent.
The USDA's forecast for reduced incomes "confirms the deteriorating fundamentals in the farm economy," JP Morgan analyst Ann Duignan said in a note.
Deere & Co, the largest maker of farm equipment, said last week that weak commodity prices and falling farm incomes were continuing to hurt demand for agricultural machinery. The company reported that third-quarter profit tumbled 40 percent and gave a bleaker forecast for fourth-quarter sales. (Reporting by Tom Polansek; Editing by Meredith Mazzilli and Richard Chang)