800 326 9054In its first estimates for the 2026-2027 marketing year, the Agriculture Department is anticipating a steep drop in U.S. wheat supplies, as well as a decrease in corn, but higher prices for both corn and soybeans as demand for biofuels grows.
USDA unveiled its first outlook for 2026-2027 in its World Agricultural Supply and Demand Estimates report Tuesday. The department anticipates a sharp reduction in wheat supplies on lower plantings and yields, a smaller corn crop and lower exports, but higher soybean supplies, and even lower beef production. Corn and soybean prices are set to rise, however.
All wheat production is anticipated to fall more than 20% from 2025-2026, from almost 2 billion to 1.6 billion bushels, with winter wheat set to fall 25% to just over a billion bushels. The numbers provide the first glimpse at winter wheat volumes drawn from field surveys; USDA uses the May Crop Production report to forecast area, yield and production.
The estimates come on the back of the latest crop progress report showing around 40% of U.S. winter wheat crops are showing a “poor” or “very poor” rating, up significantly from early May, as drought in the Southern Plains continues.
If these projections materialize, the U.S. will record the smallest wheat crop in 54 years, Karen Braun, chief market analyst at Zaner Ag Hedge, noted in a post to X.
The wheat number is “probably the most striking number in this report,” North Dakota State University Economist Shawn Arita told Agri-Pulse.
U.S. corn production is also set to fall for 2026-2027. Both area and yields will drop, the report says, delivering 6% lower production from the previous year. But U.S. growers are carrying over larger-than-normal stocks after a bumper 2025-2026 crop, which will partially offset lower 2026-2027 production. Overall, corn supplies are only set to fall 2% in 2026-2027.
Corn exports are also set to fall 5%, with USDA noting both Brazil and Ukraine’s growing international sales.
Analysts had been anticipating that U.S. soybean production would grow after a large corn crop last year.
Tuesday’s report pegs 2026-2027 U.S. soybean production at 4.4 billion bushels, up 173 million from the previous year.
Exports are set to rebound after China’s retreat from U.S. soybeans last year, but Arita says the real story is in the U.S. energy transition.
USDA anticipates 17.8 billion pounds of soybean oil use, up 3.6 billion from the previous year. The growth is due, in part, to higher Renewable Volume Obligations from the administration, but analysts have also noted high diesel prices following the Iran invasion are spurring increased interest in biofuels.
Increased biofuel demand is “crowding out soybean oil exports and reshaping the U.S. soybean complex from an export-oriented crop into a domestic energy crop,” Arita said. A crush rate of 2.75 billion bushels will absorb “most of the larger bean crop,” he added.
Both corn and soybeans are set to see bumps in price next year. In corn’s case, supply is falling faster than use, lifting the season-average farm price from $4.15 per bushel to $4.40. Meanwhile, soybean prices are set to grow by $1 from $10.40 in 2025-2026 to $11.40 in 2026-2027.
Notably, other than winter wheat, the May WASDE uses the late March Prospective Plantings report to capture planted acreage across commodities. Accordingly, Arita points out that some of the impacts of the conflict in the Middle East and the subsequent input price shocks are already reflected in these estimates.
“Any further acreage adjustments that happened after March 31 would show up in later reports,” he notes.
Elsewhere, U.S. beef production is set to further contract as herd rebuilding limits the cattle sent to slaughter, while pork and poultry production are set to increase, bringing overall red meat and poultry production forecasts above their 2025-2026 levels.
Rice production and exports are also set to slide. USDA anticipates a 15% fall in production on lower acres and a 2 million hundredweight fall in exports amid fierce global competition. Prices are set to rise to a season-average farm price of $13.50 per hundredweight from $12.10 the previous year, however.
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*Sourced from Agri-Pulse.