When you have one crop in the bin and another growing in the field, worrying about next year’s production may seem premature. But the 2027 outlook is fast taking shape, as markets try to stabilize following a spring of war, and perhaps peace. Spending on fuel, fertilizer and interest payments, not to mention potential selling prices for corn and soybeans, are all under the microscope for managers wondering what to expect.
Perhaps the best place to start is the board, where futures carries provide clues about traders’ opinions. December 2027 corn closed last week at a 32.5-cent premium to December 2026. November 2027 soybeans, by contrast, finished at a discount to 2026 of 16.25 cents.
Those differentials reflect what’s happening on ledger forecasts: While soybean losses look ready to rise, the red ink for corn could be ready to ease just a little, giving the feed grain an advantage on the bottom line compared to the oilseed in the battle for acres. Based on the latest USDA forecasts, 2027 corn could still lose $77 an acre, which would be the fifth straight year under water for the crop. But soybeans might lose $93 an acre, maybe enough of a change to see corn buy a few acres, if only by default.
No rate cut in sight
One bill that may not change as soon as some thought possible is the cost of money. The Federal Reserve voted last week to keep its target range for benchmark short-term rates unchanged at 3.5% to 3.75%. Traders betting on Federal Funds Futures aren’t expecting new Chair Kevin Warsh to start a central bank reduction for nine months or more.
While President Trump touted Warsh as a rate-cutting dove, events intervened otherwise, pushing inflation indicators higher. Both the Consumer Price Index and Personal Consumption Expenditures rose much faster than the Fed’s current 2% target, a level not seen since the depths of the pandemic in 2019. That caused many Fed officials to favor higher rates.
Despite that mood shift, ag costs started to move in the right direction for growers as traffic began to flow in fits and starts through the Strait of Hormuz. Middle East urea saw the biggest retreat, falling more than $400 a ton from April highs to settle last week at prices last traded back before the U.S. and Isreal began bombing Iran in February. U.S. wholesale nitrogen benchmarks didn’t follow suit but came off spring highs a little. Ammonia June settlements at the Gulf knocked $25 off May but are still at $760 a ton — not cheap.
In the product sector, phosphates wavered slightly, thanks to their nitrogen component, while it was still too early to see a reaction in potash.
Fuel, fertilizer costs ease
USDA’s latest production cost forecast, released last week, showed corn operating expenses holding steady for 2027, with fuel and fertilizer bills dropping. The effects of inflation continue to push costs for labor and other manufactured inputs higher.
Ultra Low Sulfur Diesel is a poster child for what’s happening. Chicago cash diesel, the Midwest benchmark, is still pricey but at least closed last week below $3 a gallon after topping out near an eye-watering $5 a gallon in May.
Of course, higher costs won’t matter as much if grain markets take off, too, and thus increase revenues. December 2027 corn broke 50 cents off May highs last week but started to firm after holding lows for the year. Corn futures typically peak for the summer near the end of June, just in time for Independence Day fireworks.
November 2027 soybeans followed a similar trajectory to corn but could find a spark if early season dryness builds into enough of a weather threat in in July to prompt a second-half of summer rally.
Summer weather will likely see farmers scrambling to move old crop and new crop 2026 production. But even if it’s too early to price next year’s crop, watching input prices could provide an alternative opportunity if fuel and fertilizer reap a peace dividend.