Wheat

Wheat updates

U.S. wheat outlook diverges as Plains struggle while PNW excels.

The U.S. winter wheat crop is facing its poorest conditions in more than three decades. Nationally, as of July 5, just 26% of the crop is rated as good-to-excellent condition. Major wheat production states in the Plains region including Kansas, Nebraska, Oklahoma, and Texas, are particularly stressed, with less than 15% of their crop in good-to-excellent condition. As a result, yields and quality are expected to decline significantly in this region, leading to more abandoned acres and lower national production. National yield estimates are projected to fall 14.8% year over year, while USDA's updated June forecast projects winter wheat production down 26.5% from 2025.

In contrast, the crop conditions across the Pacific Northwest provide a bright spot, with above-average yield potential emerging. Crop development is running one to two weeks ahead of average, with most of the crop rated as good-to-excellent condition. Recent rain and cooler temperatures in late June helped stabilize grain fill, improve test weights, and align development closer to seasonal norms. Washington and Idaho report winter wheat yields ranging from average to near-record levels, with some operations anecdotally expecting yields up to ~30% above normal.

Montana wheat conditions remain mixed, with improved moisture offset by earlier drought and wind damage. While recent rains and cooler temperatures have improved grain fill, conditions remain uneven. Early dryness, topsoil loss, and limited input application continue to constrain yield potential in some areas. Crop prospects are generally strongest across central and northern regions. Growing season precipitation in northeastern Montana has rebounded to nearly 12 inches year-to-date versus the less than 6.5 inches last year, supporting crop development.

Wheat margins remain under pressure. Cash prices have fallen to roughly $6.30 per bushel, down from nearly $7.00 per bushel in May. Higher interest costs on operating lines and weakened working capital positions are pushing growers to sell grain “off the combine” rather than store it. This reflects limited confidence in post-harvest price recovery and a broader shift toward cash-flow-driven marketing decisions.

Transportation constraints on the Snake and Columbia Rivers are adding downside risk to basis levels and producer returns. Lower river levels may limit barge draft and constrain harvest-time shipping capacity, slowing exports and raising working capital needs for elevators. These challenges are particularly impactful as off-coast freight rates have climbed to roughly $1.30 to $1.35 per bushel, significantly eroding net returns and compressing margins.

Profitability

Persistent margin pressure continues to weigh on wheat producers, as low prices and elevated input costs limit profitability, though tighter supplies and drought-driven yield risks may provide some price support in the months ahead.