Average Yields, Rising Prices — Still Not Enough!
Kansas City wheat futures have firmed up some in recent weeks, with the July contract settling near $6.34/bu and September around $6.41/bu as of mid-June. After a long stretch of weak prices, that's a welcome change of direction. But run the elevated prices against high input costs and an average production year, and the math still doesn't work in wheat's favor.
Looking at the 2026 harvest, our yields were average. To be honest, that is amazing when accounting for drought, freezes, and unusual weather. However, the problem isn't production. It is fertilizer, chemical, fuel, and application costs. Inputs have stayed elevated even as commodity prices struggled to keep pace, and that P/L gap hasn't closed meaningfully despite the recent uptick in the board. An average yield in an average year still leaves a thin margin once all the input costs are accounted for, and in a below-average year, that margin disappears entirely.
The June WASDE report sheds some light on why prices haven't moved more. USDA confirmed this year's U.S. hard red winter wheat crop is the smallest since 1957, citing the drought that's gripped the Plains. Normally a crop that small would push prices up hard. Instead, USDA actually trimmed its season-average farm price forecast by 50 cents to around $6.00/bu, even while cutting the production number. The reason is global supply. Stronger wheat production out of Russia, Turkey, and Ukraine more than offset the U.S. shortfall, and global stocks remain well above the levels we saw just a few years back.
That's the frustrating reality of farming wheat right now. A weak U.S. crop should be bullish. But the rest of the world is growing enough wheat that it doesn't matter much. Until that global oversupply works itself out, or input costs come down to meet where prices actually sit, an average yield on an average year is going to keep being a break-even-or-worse proposition for wheat in this part of Kansas.