USDA highlighted its annual Outlook Forum last week with a 2026 forecast for agriculture that even the most plucky optimist would be hard-pressed to call upbeat. And even that smidgeon was quickly obscured by the latest fog bank rolling in on the back of more uncertainty over trade and tariffs.
For the record, the agency believes net farm income could be up $3.5 billion in 2026, a little less than 2%, thanks mostly to a brisk recovery in livestock production. But forecasts for modestly higher crop prices due to strong exports is anything but a done deal after the Supreme Court invalidated President Trump’s widespread use of tariffs.
Forecasts hinge on exports
The high court action cast doubt on trade deals that used ag as a cornerstone. The administration in response announced across-the-board 15% duties on all imports. While other trade laws could be used to revamp the deals, trade partners’ response in the meantime made any attempt to forecast sales a guessing game at best. And any changes in prices, not to mention weather outlooks for spring, could upend the government’s acreage assumptions for the coming year.
Those forecasts, for 94 million corn acres, down 4.8 million, and 85 million soybeans acres, up 3.8 million, were in line with trade guesses, with the next inflection point on the topic due March 31, when Prospective Plantings data comes out. But USDA’s forecasts for small increases in both corn and soybean prices hinge on exports, which are anything but certain.
To be sure, the agency wasn’t exactly gushing over prospects for sales or prices. For corn, USDA even said exports are likely to fade a little due to large supplies out of South America. But lower corn acres would mean a crop of 15.755 billion bushels with normal yields, down 1.266 billion bushels from 2025 estimates, with 1.8 billion left over at the end of the marketing year. If realized, that could add a dime to average cash prices, lifting them from $4.10 to $4.20.
That level is nothing to write home about and below the full cost of production for the average grower. But even that scrap may be overly optimistic. My own forecasting model puts the average cash price at $4.07 due to weaker exports and higher leftover supplies. March 2027 futures are already at the top end of the price range the model forecasts, suggesting the market’s rally may be due for a pullback. Whether any decline is a major turn depends in part on how much corn Brazil has to dump when its large second crop ripens in coming months.
Will China buy any soybeans?
Tariff uncertainty could also upset hopes for sales to China, which underpin most soybean forecasts. The Supreme Court handed down its ruling just as the Administration scrambled to finalize plans for President Trump’s visit to China, which long had the trade expecting new deals for window dressing. But with the administration already backing off forecasts from the last agreement, new deals are even more iffy, though the Supremes gave China new negotiating leverage.
USDA’s updated “baseline” pegged 2026 exports at 1.7 billion bushels, up 175 million from current 2025 crop totals. My model is a little more optimistic and also sees tighter ending stocks for 2026 than USDA, which keeps carryout virtually unchanged.
But USDA raised its average cash forecast a dime from 2025, to $10.30. My model is only at $9.90 for an average and puts the top third of the futures selling range at $11.50 to $12.35 – 2026 crop contracts are just about at the bottom of that range after their rally. Like corn, that hints a pullback is likely into March, in line with seasonal trends.