2026 U.S. Ag Economic & Foreign Trade Outlook
USDA projects moderating costs, shifting acreage, tighter livestock supplies and a deeper ag trade deficit as global competition reshapes the outlook
USDA’s Office of the Chief Economist released its 2026 Agricultural Economic & Foreign Trade Outlook (link), laying out a year defined by structural headwinds, modest price recovery, rising global competition, and an evolving trade environment. The presentation — delivered by USDA Chief Economist Dr. Justin Benavidez — highlights how commodity markets, farm income, biofuel demand, and geopolitical trade dynamics are converging to shape the farm economy heading into the 2026 crop year.
Long-term headwinds still shape the farm economy
The opening sections underscore that U.S. agriculture continues to operate under pressures that have built for over a decade. Global production growth during the 2008–2016 period created large inventories for corn, soybeans, wheat, and rice, while a stronger U.S. dollar and shifting trade dynamics compressed price competitiveness. Events such as the Covid-19 shock, Russia’s invasion of Ukraine, and recent export booms to China created volatility, but did not fully erase longer-term structural challenges.
USDA analysis shows production costs beginning to moderate after several years of sharp inflation. Real per-acre costs for seed, fertilizer, and chemicals are expected to ease slightly in 2026, with total U.S. production expenses forecast to decline about 0.9% in inflation-adjusted terms — an important, if modest, relief for growers facing tighter margins.
Global competition weighs on major row crops
USDA’s outlook emphasizes intensifying international competition:
- Corn: Large global stocks among major exporters continue to pressure prices.
- Soybeans: Brazil’s expanding production and export share increasingly challenges U.S. dominance in world trade.
- Cotton: Brazilian exports have grown rapidly, narrowing the historical advantage held by U.S. suppliers.
- Wheat: Rising ending stocks globally are contributing to weaker farm prices compared with the highs seen earlier in the decade.
These trends help explain why USDA expects only modest price gains into 2026 despite slightly tighter domestic acreage.
Crop prices and acreage: modest shifts, not dramatic changes
USDA projects generally stable — but slightly higher — crop prices in 2026:
- Corn: about $4.20/bu
- Soybeans: $10.30/bu
- Wheat: $5.00/bu
- Cotton: 63 cents/lb
- Rice: $14.30/cwt
Prices are expected to improve only marginally from 2025 levels.
A key dynamic is the soybean-to-corn price ratio, which favors additional soybean planting. Acreage expectations reflect that shift:
- Corn acreage down to 94 million acres (-4.8 million vs. 2025)
- Soybeans up to 85 million acres (+3.8 million)
- Wheat slightly lower at 45 million acres
- Cotton and rice mostly steady.
This points toward a more soybean-heavy planting mix in the 2026/27 crop year.
Farm income and federal support remain critical
USDA data shows that net cash farm income varies sharply by commodity, underscoring the uneven recovery across agriculture. While some sectors stabilize, others remain dependent on safety-net programs and insurance indemnities.
The outlook stresses the continued role of federal support mechanisms:
- Direct government payments
- Crop insurance indemnities
- Income stabilization programs
These supports have played an important role in smoothing volatility, particularly as commodity prices declined from pandemic-era highs.
Livestock: tighter cattle supplies support prices
Livestock markets appear stronger relative to crops:
- Cattle inventories remain historically low, contributing to high beef cutout values.
- Fed and feeder cattle prices are projected to rise again in 2026.
- Dairy production is expected to increase modestly, while milk product prices normalize.
- Egg prices are forecast to decline sharply after recent spikes.
USDA projects most livestock prices to move moderately higher year-over-year, reflecting continued tight supplies and resilient protein demand.
Demand changes: biofuels and GLP-1 effects
The outlook highlights changing consumption patterns, including growth in GLP-1 weight-loss drug use and potential shifts in food purchasing behavior. USDA notes that snack sales have diverged from obesity-drug adoption trends, suggesting evolving consumer habits that could influence agricultural demand longer term.
At the same time, biofuel policy continues to be a major demand driver:
- Expansion in soybean crush capacity tied to renewable diesel demand.
- Increased use of fats, oils, and greases under the Renewable Fuel Standard and emerging 45Z clean fuel incentives.
These policy-driven demand channels remain central to oilseed markets.
Agricultural trade: deficit projected to deepen
One of the most notable projections is the U.S. agricultural trade balance:
- FY 2026 exports forecast: $173 billion
- Imports forecast: $210 billion
- Resulting trade deficit: $37 billion
USDA attributes the changing trade picture to shifting global demand, stronger competition in bulk commodities, and growth in higher-value imports.
Additional charts show:
- Structural movement away from surplus in bulk commodities.
- Greater reliance on high-value and processed product trade.
- New trade agreements potentially opening opportunities in markets such as Taiwan, Malaysia, Argentina and Guatemala.
Weather and climate risk remain a wildcard
USDA included climate outlooks showing evolving ENSO conditions — with model forecasts monitoring transitions between El Niño and La Niña patterns. Seasonal maps suggest heightened weather risk in parts of the U.S., reinforcing uncertainty around yield assumptions heading into planting season.
Bottom line: a transition year for U.S. agriculture
The 2026 outlook describes a farm economy moving into a transition phase:
- Input costs easing but still high
- Commodity prices stabilizing at lower ranges
- Livestock outperforming crop sectors
- Biofuels supporting oilseed demand
- Global competitors gaining share
- Trade deficit widening despite export opportunities
Overall, USDA’s message is one of cautious stability — not crisis, but not a return to the boom conditions seen earlier in the decade. The path forward depends heavily on trade access, weather outcomes, and how quickly demand growth can absorb expanding global supplies.
