2026 3rd Quarter Ag Outlook
- Grant Wiese
- 2 days ago
- 5 min read
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2026 3rd Quarter Ag Outlook
It is time for our quarterly ag outlook. Enjoy!
Interest Rates
7%-8% are average historical interest rates. Don’t expect to see 5% on ag loans again for a few decades.
The next Fed meeting is happening July 29 and we have a new chairman to get to know, Kevin Warsh. Two things that have caught my eye since he started:
1. He does not like our current inflation figures.
2. Communication coming out of Fed meetings will be limited.
The current target rate is 350-375. FedWatch (Source: CME FedWatch Tool – CME Group) is expecting a 50.7% chance that we see a 25bps increase in September, and roughly a 33% chance there is another 25 bps increase by January 2027.
(Reminder: for several years the Fed watch tool has been too conservative on rates, with probabilities for lower rates being mostly incorrect.)
The S&P has gained back what was lost during the Iran war but there is continuous chatter of a bubble. Is there a tech bubble? Is there a housing bubble? Could banking deregulation lead to another banking bubble? We don’t know yet.
10-year treasury bonds hit 5% in the past 2 weeks, which is the highest level seen since May 2025. (Source: Resource Center | U.S. Department of the Treasury). The trend is moving higher.
Land Prices
Not a lot of land moving right now, but private deals are being worked on between tenants and landlords for ground that will sell this fall. Land prices in the first half of the year were 2-3% lighter, with more ground available later in the spring that usual due to operating financing being cut off or not enough money being available to plant the crop.
With the amount of cash leaving wallets over the past two years, I imagine a lot of farmers will want to wait and see where they are positioned after harvest before they consider adding any more ground.
As we approach September 1, landlords will be considering the runup in commodity prices from this past spring and large amount of government subsidies that continue going out, not realizing how much more expensive this crop was to plant.
There are more absentee landlords out there. Remember, as the landlord becomes further removed from the operation, their understanding of how a farm is run disappears. I’ve heard of a share rent landlord moving on from a tenant due to poor yields and giving the farm to another grower, not realizing there was a hail event on the farm to cause the lower yield that year.
Yields
Dryness in the west resulted in some later planting dates as farmers were waiting for moisture or had to run pivots to get the crop in the ground. Below average replant since that time. Crop conditions remain strong for corn and soybeans. With the amount of moisture out east and cool weather seen in June, it is unlikely a record yield will be harvested.
This is like my 3rd quarter ag outlook on yield from 2025 and we managed to produce record crops with less-than-optimal conditions; so take that with a grain of salt. Much of the final yield result is determined in July/August.
Beware of disease, it continues to spread and have a major impact on final yields.
Equipment Prices
Dealerships seem to be filling up with equipment again. It will be interesting to see if they push some lease deals again going into this fall to get equipment moving.
Operation Improvements
Equipment purchases are way down. Many operations still have 2 payments left on equipment bought from record high 2022 earnings and are struggling to stay above water. Banks are encouraging a wait and see approach if you have positive working capital, but the number of operations without cash has been growing.
Commodity Price Direction and Marketing
Rarely is a bottom found in June for corn, but we had opportunities to sell earlier. A combination of Iran war premium, higher oil prices, U.S. wheat issues, and strong exports drove prices much higher than expected. Many of those tailwinds are gone as we see:
· Iran agreements being worked on
· Oil moving lower with a close of the war
· Expected higher interest rates to fight inflation
· No major weather events or crops issues in the U.S. at this time
Technical trends continue to push corn prices lower. My hope is we can just find a bump come harvest for any unpriced grain that cannot be stored off the combine.
Weather
I get my weather updates from Eric Snodgrass with Nutrien Ag Solutions, you should sign up for his e-mail, eric.snodgrass@nutrien.com, and check out his videos here: June 24, 2026: 22 Zettajoules… | Late June Ridge Placement Delivers Excessive Heat | Cold Northwest
Much needed rains came to the west, along with severe weather. The corn belt is reaching a critical point where high winds need to be avoided the first two weeks of July. Long term forecasts are showing dryness will return to the western corn belt as we progress to mid-summer. Rain makes grain and we had it early, but will there be enough heat to achieve top end yields with some rains sprinkled in?
Working Capital Trend
This has been an interesting year to monitor Working Capital:
Many who were proactive and priced fertilizer were rewarded.
Many who were slow had to pay a premium for fertilizer.
Many who were proactive (aggressive) with grain marketing sold more at a lower price.
Many who were slow to sell captured $5 futures on more bushels.
The Working Capital problem isn’t just in the Mid-West, but a global issue:Brazil farm auctions explode as rural debt spirals in a changing climate | Reuters
Inflation on input costs were not kind to producers putting in the crop. However, the runup in ’26 futures allowed for a lot of grain to be sold at breakeven projected prices. With the higher grain sales and ECO payments going out now, there is potential for some operations to maintain or slightly improve Working Capital going into the winter IF they can produce an average yield.
The next big thing I am watching, can fertilizer prices come all the way back down to winter 2025 prices? Usually when inflation occurs on inputs, we have to adjust to a new normal price that is higher than historical.
Overall Financial Picture
Reactive farmers continued to spiral lower as input volatility has made for an expensive 2026 crop. Farm bankruptcies are on the rise, and the number of questionable finance strategies from banks are occurring as well. Unfortunately, too often I see operational restructurings from farmers and their lenders at the wrong time. Most operations should not be adding debt to the balance sheet now.
Cash flows were negative going into planting, but the opportunity to forward contract at strong prices has brought these projections closer to breakeven. With late winter government payments, many producers receiving an ECO check over the summer, and the expectation of ARC payments this fall, a lot of outside money is flowing in to prop up the farmer. Can the producer keep this money, or will it go straight out the door to all-around higher inputs for the 2027 crop?
Final Summary
There is your 3rd Quarter Ag Outlook. Every operation is different and needs alternative advice compared to their neighbor. Nothing mentioned above is a one size fits all approach. While I hope this is helpful, what is better for your operation’s well-being is to update your own financials, run them by a trusted financial advisor, make your own plan for the upcoming year, and adjust that plan when necessary.
If you want that financial advisor to be me, you can book me below:
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Have a great week!
Grant
