Key Takeaways:
Hard red winter wheat futures have surged to near two-year highs, gaining 28 percent since the start of the year, as a punishing drought across the U.S. Southern Plains threatens to decimate the 2026 harvest.
"Most HRW-producing states are suffering from elevated crop stress," Tanner Ehmke, lead economist for grains and oilseeds at CoBank, said in a recent report. "As poor to very poor ratings climb, abandonment rates also typically follow."
The data supports the dire outlook. In Kansas, the top U.S. wheat-producing state, more than 40 percent of the crop was rated “poor” or “very poor” at the end of April. An annual crop tour in Oklahoma estimated the state's yield at just 23.11 bushels per acre, a sharp drop from 35.9 bpa last year. CoBank estimates that abandonment could reach 30 percent, potentially slashing the total U.S. HRW crop to under 600 million bushels, a 25 percent reduction from 2025.
The market is now focused on the U.S. Department of Agriculture's May 12 Crop Production report, which will provide the first official estimates for the 2026-27 season. July K.C. HRW wheat futures settled at $6.87 a bushel on Wednesday, after rallying over $1.50 this year and briefly touching $7.20 in late April.
Despite the dire production forecasts in the United States, the rally faces significant headwinds from the global market. Ample worldwide supplies and stiff export competition, particularly from Russia, are putting a ceiling on prices. The recent rally has made U.S. wheat exports significantly more expensive than their counterparts, and a slow start to 2026-27 export sales reflects the reality that global importers have other options. While U.S. farmers face hardship, the world is not yet short of wheat.
This article is for informational purposes only and does not constitute investment advice.
