2026: Producer optimism improves

Key Points

• Global grain and oilseed markets are experiencing oversupply, but optimism is increasing due to increased biofuel production and improved export conditions.

• Record harvests in South America are reducing U.S. competitiveness in oilseed exports.

• Demand for U.S. grains and oilseeds is expected to strengthen as reduced prices stimulate usage.

Global grain and oilseed markets remain oversupplied, but increased biofuels production and improving export conditions are boosting U.S. producer optimism that prices have passed their cyclical bottoms.

After a year of trade uncertainty between the United States and China, a partial détente in the trade war has resulted in a quick flurry of soybean sales to China. But current price dynamics – Brazilian origin is likely to remain the significantly cheaper option in coming months – suggest that a return to historic U.S. export volumes is unlikely.

For oilseeds, a record soybean harvest in Brazil – paired with record oilseed production in countries like Kazakhstan that enjoy proximity to China – will erode U.S. soybean-export competitiveness into China in 2026. World grain supplies are also ample, with enlarged harvests in virtually every major exporting country for corn and wheat, which will compete with U.S. exports. Hope remains that China will start buying U.S. sorghum again, which would provide much-needed support to feed-grain prices.

There is an upside. Demand for U.S. grains and oilseeds will continue strengthening as reduced prices do the arduous work of stimulating usage. Mexico – the most important destination for U.S. corn, wheat and rice as well as the second-most important soybean destination – will continue to grow in importance. Demand for wheat and flour will continue its ascent in sub-Saharan Africa. The Middle East and Southeast Asia are increasingly turning to excellent-quality U.S. soybeans and soymeal to feed growing poultry flocks and livestock herds. A potential weakening of the U.S. dollar may give U.S. exports an additional tailwind.