With US all-wheat production forecast at its lowest level in more than 50 years and corn slowing from last year’s record high, the one growth spot in 2026-27 is soybeans, with production expected to increase 4% and crush setting a new record.
Farmers are planting more soybeans due to stronger profitability compared to other crops, while soybean oil demand as a feedstock in biomass-based diesel production is driving crush. Another agricultural bright spot was passage of legislation in the US House of Representatives allowing for year-round, nationwide sale of ethanol blends up to 15%.
“At a time of extreme market volatility and higher costs, this bill provides badly needed certainty for fuel retailers, oil refiners, ethanol producers, and consumers alike,” said Geoff Cooper, president and chief executive officer of the Renewable Fuels Association (RFA). “The legislation gives Americans the freedom to choose E15 and removes three decades of red tape that had stifled competition and choice in the marketplace.”
In line with the higher soybean production, exports are expected to increase by 2.72 million tonnes with the US share of global soybean trade projected at 23%, according to the US Department of Agriculture’s Oil Crops Outlook.
The Trump administration and China have worked toward resolving trade conflicts with agreements in October 2025 and this May. In the most recent agreement, the United States said China agreed to purchase at least $17 billion per year of US agricultural products in 2026 (prorated), 2027 and 2028. That is in addition to the soybean purchase commitments made last fall that included the purchase of 12 million tonnes of US soybeans during the 2025-26 marketing year and 25 million tonnes annually for the next three years.
In addition to trade policies and the ongoing war between Russia and Ukraine, the United States is feeling the effects of restricted movement through the Strait of Hormuz due to the conflict in Iran. Prices for critical inputs such as fuel and fertilizer have increased significantly in recent months.
The strait is a major transit point for crop inputs and energy products with 35% of crude oil, 20% of liquefied natural gas, 20% to 30% of global fertilizer exports and 50% of sulfur exports moving through the chokepoint. In the United States, 70% of respondents to an American Farm Bureau Federation survey said they are unable to afford all the fertilizer they need.
“When producers cannot afford full fertilizer application rates, they may reduce nutrient use or shift acreage decisions, both of which increase the risk of lower yields and reduced production potential in the 2026 crop year,” the Farm Bureau said.
Wheat production slump
Wheat production in 2026-27 is estimated at 42.46 million tonnes, down 21% from the previous year and 14% below the recent five-year average, according to the USDA. Winter wheat production is expected to be the smallest since 1965-66 at 1.048 billion bushels with reduced production for all winter classes.
“In addition to declining area, yields this year are down with a significant, widespread drought, which has particularly affected hard red winter wheat,” the USDA said. Hard red winter wheat production is estimated at 14.02 million tonnes, a drop of 36% from the previous year.
Durum and other spring wheat production in 2026-27 are collectively estimated at 13.99 million tonnes, down 12% from the previous year, the USDA said.
With the smaller domestic crop, US wheat prices are expected to be less competitive, lowering exports to 21.09 million tonnes, a drop of 3.67 million tonnes year over year. Global trade is forecast to be smaller overall, the USDA said, with several major markets expected to reduce imports.
Corn production in 2026-27 is estimated at 406.42 million tonnes, 6% below the record production seen in 2025-26. If realized, this would be the second largest crop on record. Total corn supply, with larger beginning stocks, also would be the second highest on record.
While corn exports are expected to drop to 80.01 million tonnes, it is still the second largest export total on record. Global feed use of coarse grains is expected to increase, the USDA said, including within some of the key destinations for US corn exports.
Total corn use in 2026-27 is also forecast to fall below 2025-26 levels due to the expected lower exports and feed residual use. Food, seed and industrial use is estimated at 176.79 million tonnes, including 142.25 million tonnes for ethanol, unchanged from last year.
The United States produced 16.49 billion gallons of ethanol in 2025, making it the largest producer in the world with 52% of global production, according to the RFA. Exports increased 11%, setting a new record at 2.2 billion gallons, and accounting for 13% of total demand.
Top destinations for US ethanol included Canada, which accounted for more than one-third of all US exports, the EU and India.
“As carbon intensity requirements tighten, low-carbon US ethanol has emerged as the most economical compliance option, positioning Canada as the most stable export market for US ethanol through 2030,” the RFA said.
A different type of biofuel production is boosting demand for US soybeans. Total production in 2026-27 is estimated to increase 4% to 119.75 million tonnes on higher planted acreage.
Soybean crush is expected to reach a record 74.84 million tonnes on favorable margins and strong demand for soy oil for biomass-based diesel production. Domestic soybean oil demand is expected to increase 10%, the USDA said, with use for biofuel production forecast to grow 25% to 8.07 million tonnes.
US soybean exports are estimated at 44.36 million tonnes, an increase of 2.72 million tonnes on higher global demand. Meal exports are forecast to reach a record high of 19.69 million tonnes, largely due to lower prices and moderate global meal demand growth.
“In addition, the United States is expected to increase its share in global soybean meal trade, with competitive prices and expansion in shipping capacity out of the Pacific Northwest,” the USDA said.
Flour demand drop
US flour consumption and production have both been trending down, according to data from USDA offices. In 2025, per capita consumption dropped 2.3 pounds, to 126.6 pounds, the smallest since 125.6 pounds in 1986, according to data by the USDA’s Economic Research Service (ERS).
After holding within a narrow range for much of the 2010s, per capita flour consumption has been trending downward since 2018, when the figure was 132.9 pounds.
“Some industry sources have noted that the recent slowing trend in consumption may be related to the increased use of appetite-suppressing drugs and other consumption trends focused on perceived health benefits,” the USDA said.
Farmland by State in 2025 - USA
Total flour production in 2025 was 419 million cwts (19.01 million tonnes), down 1.4% from the year before. So far in 2026, flour production is continuing its downward trend with a total of 102.547 million cwts (4.65 million tonnes) in January-March 2026, down 2.7% from the same quarter a year earlier, according to data by the National Agricultural Statistics Service. Production was also down 1.5% from the previous quarter.
The first three months of 2026 extended to five the streak of consecutive quarters in which flour production was lower than the comparable period the year before. At 102.547 million cwts, first-quarter production was the smallest in 15 years, or since 100.024 million cwts in January-March 2011.
US flour mills in the first quarter operated at 84.7% of six-day milling capacity, down from 86.6% in 2025, but above 84.3% in the final quarter of 2025. Capacity utilization in the quarter was the smallest since 82.7% in January-March 2019.
The United States has 142 flour mills with a total daily capacity of 1,564,709 cwts (70,974 tonnes), according to Sosland Publishing’s 2026 Grain & Milling Annual. Seventy-one of the mills have a capacity of 10,000 cwts (453 tonnes) or more while 16 have a capacity under 1,000 cwts (45.35 tonnes).
The largest mill in the United States as of publication was North Dakota Mill & Elevator Association in Grand Forks, North Dakota, US, with a capacity of 54,500 cwts (2,471 tonnes). The largest milling company is Ardent Mills with a total capacity of 468,285 cwts (21,242 tonnes) at 30 wheat flour mills, one durum mill and one rye mill.
