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U.S. wheat demand at five-year high - Supply down. Rain wasn’t everywhere on The Plains Premium expansion signals price opportunity
Is 2026 the year to put the rally hats on in winter wheat country — and keep them on, at least for a little while?
After a dismal 2025, wheat markets showed some signs of upside life, or at least bottoming out, over the past month. Wheat ranked among the poorest performers among major commodities in 2025, with the most-active soft red winter (SRW) wheat futures contract dropping over 8% for the year and hitting a six-year low in October.
But the past month or so saw some buoyancy return in futures prices, along with a few other interesting developments that suggested the market may be shaking off some oddities or outlier elements from the past year.
Despite widespread Plains rains last fall, not every area benefited equally. In Oklahoma, drought conditions expanded from December through early January, with most of the state considered anywhere from “abnormally dry” to in “extreme drought,” government weather maps showed. Initial crop ratings from Kansas and other states in January showed deterioration from November readings.
Persisting concerns over drought or other weather problems could give wheat prices a lift over the winter.
“The markets have zero weather premium baked in, so we could have a little room to push values higher, short-term, until concerns ease,” StoneX analyst Mike O’Dea wrote in a January report.
Citing conversations with customers, “the wheat still looks in good shape, but the plants are growing too much when the crop would normally be in dormancy, (which) makes them susceptible to any cold snap seen later,” O’Dea wrote.
Acreage
With wheat prices still relatively weak compared to corn and soybeans, many U.S. producers continue to favor the latter two crops for another year. In January, USDA estimated 2025 U.S. winter wheat plantings at 32.99 million acres, down 0.5% from 2024 and the lowest since 2020.
Ample Plains precipitation late last year “allowed more continuous cropping behind corn, soybean and milo harvests,” said Tanner Ehmke, grain and oilseed economist at CoBank. However, “low wheat prices relative to corn and soybeans, I think, are still going to result in a net loss of wheat acres.”
Demand
While abundant global wheat supplies have gotten a lot of press, demand for the U.S. grain has held in there. For the 2025-26 marketing year through early January, U.S. wheat export sales commitments were up 18% from the same period in 2024-25. USDA estimated overall demand for U.S. wheat at 2.05 billion bushels, a five-year high.
Spreads
July 2026 futures for both SRW and hard red winter (HRW) varieties expanded premiums over March contracts by several cents from late-2025 lows. The July-March HRW spread briefly topped 27 cents to hit a two-month high at the end of 2025.
As the Australian grain industry moves into the 2026/27 season, the sector is operating under renewed margin pressure. Global grain oversupply across major exporting regions continues to cap price upside and maintain a broadly bearish sentiment across grain markets. Should the season deliver below-average yields, gross margins are expected to be significantly thinner than those achieved in recent years. At the same time, farm input costs remain structurally elevated, with fertilisers in particular continuing to weigh on cost structures and compress overall profitability. In addition, the expected appreciation of the Australian dollar warrants close attention, as it has the potential to further erode export returns and farmgate prices. RaboResearch's Australia agribusiness outlook 2026 provides a comprehensive view of the forces shaping the sector.
For the 2026/27 season, average gross margins are expected to decline across all states, marking a broad-based deterioration from both last season and recent historical norms. Queensland is projected to see the sharpest contraction, with average margins falling from an estimated 36% in 2025/26 to around 15% in 2026/27. Western Australia is expected to follow a similar pattern, with margins declining from 38% to 23%. We anticipate more moderate, but still material declines in New South Wales, from 35% to 25%, Victoria, from 36% to 32%, and South Australia, from 37% to 33%.
At the crop level, margin compression is expected across all major commodities in 2026/27, although the extent of the decline varies. We project national wheat margins to ease from around 28% to 19% and expect barley margins to fall from 29% to 21%, leaving both crops around one-third below their long-term averages due to rising global stocks and subdued prices. In contrast, we expect oilseeds and pulses to retain relatively stronger margin support and remain close to their long-term averages. We forecast canola margins to fall from 56% to 30%, chickpea margins from 71% to 47%, and lentil margins from 62% to 56%, supported by tighter global supply conditions and structurally stronger demand.
Tighter gross margins are likely to heighten growers' sensitivity to the longstanding trade-off between production risk and price response. In a scenario of low grain prices and rising input costs, greater emphasis may be placed on crops that have historically offered relatively higher margin resilience under variable seasonal conditions, such as barley. At the same time, canola is expected to retain a meaningful share in cropping programs despite its higher upfront cost structure, owing to its stronger margin potential relative to wheat and barley. This dynamic extends to genetically modified (GM) canola, which faces discounts of up to AUD 100 per tonne relative to non-GM in early 2026 at Australian ports. The area growth in pulses seen in recent years is likely to lose momentum amid a weaker margin outlook, but pulses remain a profitable option in higher-yielding regions, further supported by their benefits in crop rotation.
Consumer dynamics continue to shift as affordability pressures persist. Higher-income households are trading up to premium products, while lower-income consumers are cutting back, leaning on private label, and cooking more at home. New US dietary guidelines and the rapid adoption of GLP-1 medications are reshaping food demand, favoring protein- and fiber-rich products over calorie-dense, ultra-processed foods.
Winter weather added pressure across the supply chain: A late-January freeze stressed soil moisture across the eastern Corn Belt, Southeast, and Delta, with moisture recovery becoming critical for normal 2026 yields. Logistics markets remain soft, with trucking and container freight weighed down by weak demand and geopolitical uncertainty.
Cattle supplies continue to tighten. The US beef cow herd fell again to 27.6m head, setting the stage for further contraction into 2027, while calf imports from Mexico remain sharply lower. Despite higher cattle costs, boxed beef values have struggled to keep pace. In contrast, the dairy sector is expanding: December milk production rose 4.4% YOY, supported by the largest US herd since the mid-1990s. Butter and cheese production remain strong, and competitive pricing should support exports in 2026.
In poultry, early-year storms caused temporary disruptions, but chicken production still began 2026 more than 3% above last year. Boneless breast prices remain under pressure, while dark meat is supported by export demand. Pork supplies remain tight due to ongoing herd health issues, pushing feeder pig prices higher and supporting firm cutout values.
Crop markets are steady but pressured. US corn exports are running well ahead of last year, supported by historically tight Brazilian stocks, although large US inventories are keeping futures in a narrow range. Wheat remains stuck in sideways trade as global production stays strong, and soy fundamentals remain challenging despite positive policy signals.
Fruit and vegetable markets show mixed conditions. Avocado and apple supplies remain ample, while leafy-green markets are extremely tight: Iceberg lettuce prices have surged more than 200% YOY on planting gaps and weather-related disruptions.
World Farming Agriculture and Commodity news - 16th February 2026
Brazilian researchers have developed a pioneering global methodology to project how climate change will affect the physiological responses of production animals (sheep, goats, dairy/beef cattle, pigs, poultry, and quail) from 2050 to 2100.Under the IPCC’s conservative RCP 4.5 scenario (2°C average temperature rise by 2050), heat stress is expected to intensify and become more frequent, posing serious risks to agriculture, animal health, human health, and food security.Key findings:Small ruminants in the Northern Hemisphere will face much greater heat stress than those in the Southern Hemisphere, with respiratory rates projected to increase by up to 68% more in the North across 2050, 2075, and 2100 scenarios.
In tropical Southern Hemisphere systems, dairy cattle will be the most vulnerable to heat stress, while goats and beef cattle show greater resilience due to phenotypic plasticity (ability to adapt physically to conditions without genetic change).
Laying hens and quail in the Southern Hemisphere are identified as the most susceptible, with respiratory rates potentially rising up to 40% by 2100.
The study, published in Environmental Impact Assessment Review, was led by Iran José Oliveira da Silva (NUPEA/ESALQ-USP) and is based on Robson Mateus Freitas Silveira’s doctoral thesis (supported by FAPESP scholarships). It used 12 databases from Brazil, Italy, and Spain, combining biological, productive, and environmental data with machine learning, multivariate analysis, and IPCC climate projections.Drivers of vulnerability include human population growth, GDP, technological shifts, and meat consumption patterns; trade and climate showed no direct detectable effects.The researchers stress the need for resilient breeds, controlled production environments, genetic selection, conservation of local breeds, and integrated policies to balance production and adaptation.They highlight a global paradox: world population is heading toward 10 billion by 2050, hunger affected 8.2% in 2024, food waste remains at one-third of production, and livestock/agriculture contributes 31% of emissions—yet climate change intensifies pressure on food systems and makes Sustainable Development Goals harder to achieve.Limitations include inconsistent databases, small sample sizes in some regions, and lack of data on fully confined systems (common in China and the US).The work is described as “the tip of the iceberg,” with calls for expanded international databases and partnerships to build more comprehensive, comparable insights for global adaptation strategies in animal production.
The US Department of Agriculture (USDA) announced proposed updates to federal line speed regulations in poultry and pork establishments operating under modern inspection systems earlier this week. These updates reflect years of data and experience, and are designed to lower costs for American families, reduce outdated regulatory barriers for processors, and support a more efficient and resilient food supply.
“As Secretary, my responsibility is to ensure that American families have access to affordable, safe, and abundant food,” said Secretary Rollins. “These updates remove outdated bottlenecks so that we can lower production costs and create greater stability in our food system. By bringing our regulations in line with proven, real-world capabilities, we are supporting a stronger supply chain, giving producers and processors the certainty they need, and helping keep groceries more affordable for every household.”
USDA’s proposals would update outdated processing requirements for poultry and pork establishments operating under modern inspection systems. The changes would update outdated limits by allowing eligible establishments to operate at speeds supported by their processes, equipment and food safety performance, with FSIS maintaining full oversight. The proposals maintain full federal oversight in every establishment and reaffirms the authority of inspectors to slow or stop operations whenever inspection cannot be performed effectively.
Together, these actions provide clarity and consistency for establishments that have operated for years under a patchwork of waivers, pilots, and temporary measures, replacing uncertainty with predictable, long-term rules. The updated regulations would also remove worker safety attestations that fall outside USDA’s statutory authority, reducing redundant paperwork for industry.
Today’s announcement reflects the Trump Administration’s broader commitment to strengthen the American food system by cutting red tape, supporting domestic production capacity, and ensuring that consumers benefit from efficient and reliable supply chains including, but not limited to abundant, safe, and affordable food. These proposals are rooted in decades of data and uphold the core principle that affordability and strong food safety protections can and must go hand in hand.
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