MORGAN, Minn. (DTN) -- Many farmers who already refinanced operating loans to get through the 2026 crop year may have few options left if weak commodity prices persist into 2027, leaving agricultural lenders increasingly concerned about borrowers who have already restructured debt once, an ag economist said Wednesday.

The Minnesota Farmfest show hosted an outlook forum with farm economists and a commodity analyst looking at finances and market conditions. That was followed by standing-room-only debates for governor and U.S. Senate races in the state that included the ranking members of both the Senate and House agriculture committees.

When it comes to farm financing, it took a lot of creative accounting to put together operating loans for some farmers this past spring after they refinanced loans already on balance sheets, said Frayne Olson, crops economist at North Dakota State University Extension. Olson said he has spoken with ag lenders who are concerned about how some farmers will secure financing for 2027 crops.

"In some cases, we've got one shot at refinancing, and from there on, it's going to be, 'We'll see what happens,'" Olson said. "So, for a lot of farmers, this summer, 2026, is going to be a very important year."

Farmers have already restructured and, in some cases, lenders are going to be uncomfortable restructuring loans in consecutive years. Lenders are going to face their own pressures from bank examiners if they continue to finance farmers who show multiple years of negative returns and declining equity.

Not everyone is in this situation, Olson emphasized. "There are some who are doing fine, and this is really a cash-flow problem. This is about debt structure. This is about how you have been managing your reserves."

Lenders have said farmers who have undergone a major expansion and borrowed heavily to grow their operations are more vulnerable right now. That includes young farmers who started with limited assets.

Another group that is going through some challenges are families in the middle of some sort of farm succession plans, Olson said. This again affects beginning farmers because operations in transition must repurchase assets and take on a lot of debt that the older generation acquired in better times.

"They have to renegotiate the value of assets," Olson said. "That negotiating and compromise can be difficult."

CROPS SAVED BY RAIN

Thom Petersen, commissioner of the Minnesota Department of Agriculture, noted a storm system last week through the state was "a crop-saving rain" for farmers.

Mark Schultz, a senior market analyst with North Star Commodities, and a long-time participant in Farmfest, said he thought the Minnesota crop, "is the best-looking crop I have seen," driving through the central part of the state.

"I have never seen it so uniform as long as I have been doing this."

Talking about prices, Schultz said all eyes will be on next week's USDA World Agricultural Supply and Demand Estimates (WASDE) report. Last year's August WASDE raised corn planted acres by 2.1 million acres and increased the corn yield as well.

"As a producer, the last thing you want to happen is an increase in corn acres again," Schultz said.

With soybeans, a projected USDA yield of 53 bushels per acre or higher could bring down prices as well. Prices could rally later if there is no increase in soybean acres, or if there is any hiccup in the South American planting seasons.

To see a major rally, however, Schultz added, "You are going to have to have a crop problem to take prices significantly higher."

FERTILIZER PRICES

Faith Parum, an economist for the American Farm Bureau Federation, said input costs will continue to be a problem for farmers this fall and going into 2027.

"I don't believe we're going to see the fertilizer prices come back down for the next crop year," Parum said.

Olson agreed, saying fall fertilizer prices are expected to remain similar to what farmers see right now.

"I'm not optimistic fertilizer prices will drop," he said. "If we can hold fertilizer prices where they are right now, that will be the best-case scenarios."

U.S. SENATE DEBATE

The political debates are notable given Minnesota has both the ranking members of the House and Senate Agriculture committees, and both are running for other offices.

In the race to replace retiring Sen. Tina Smith, a Democrat, four candidates from the two parties had different takes on the Trump administration's impact on the farm economy. Minnesota holds its primaries on Aug. 11.

Rep. Angie Craig, a Democrat and ranking member of the House Agriculture Committee, blamed the farm economy on Trump's tariffs and blamed the administration for delays getting E15 passed through Congress.

"Until the administration's policies are corrected, we're going to continue to have tough times in this country," she said.

Lt. Gov. Peggy Flanagan, a Democrat, said Republicans fractured the farm bill coalition by cutting the Supplemental Nutrition Assistance Program (SNAP) last year. She noted about 45% of SNAP recipients in the state are in rural counties. Flanagan, however, also drew more heat because of the state's welfare fraud under her and Gov. Tim Walz.

Former sportscaster Michele Tafoya, a Republican, said farmers face too many regulations, and she also noted that when it came to the House-passed farm bill, "Angie Craig voted against it." Tafoya also pointed out there were no new trade deals under the Biden administration, but Trump has pressed to expand farmer access. Talking about the fraud in social programs, Tafoya said it was an embarrassment to the state of Minnesota. "Some people let this happen. Do they deserve promotions? Do they deserve raises?"

Reflecting the division over immigration and H-2A, Craig and Flanagan drew a mix of both boos and cheers when they talked about giving legal status to people who have been working in the U.S. and not violated laws.

Former basketball player Royce White, a Republican who has captured the support of social conservatives in recent years, said, "Any pathway for illegal foreign invaders is amnesty."

Asked about beef prices and farmers, White said, "I didn't come here to kiss the farming community's ass."

GOVERNOR'S RACE

Sen. Amy Klobuchar, a Democrat, and ranking member of the Senate Agriculture Committee, participated in her debate with three Republican candidates, then rushed to get back to Washington, D.C., for the farm bill markup in committee on Thursday.

Seeking the Republican nomination to face Klobuchar are Minnesota House Speaker Lisa Demuth, MyPillow founder Mike Lindell and Army veteran Kendall Qualls. Another candidate also is on the GOP ballot, but he did not poll high enough to join the forum.

Republicans focused again on the state's fraud problem while Klobuchar said she would ensure the governor wouldn't be a "rubber stamp for Donald Trump."

Lindell, the only candidate in a suit and tie, later touted his relationship with the president.

"I have an advantage over everyone up here. I can call and work with the president of the United States."

Also see, "USDA Provides Reprieve on Crop Insurance Premiums, Restores Prevent Plant Buy-Up," https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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