USDA Forecasts Inflation-Adjusted Farm Income Will Fall 5.5%

USDA released its closely-watched September farm-income forecast Thursday, projecting net farm income at $158.4 billion in 2026, down $4.3 billion from 2025. After inflation, the decline is considerably larger — $9.1 billion, or 5.5%. Perhaps more significant for producers is the sharp increase in expenses. USDA expects production costs to reach $492.8 billion, up $21.2 billion, or 4.5%. Fertilizer, fuel and livestock purchases account for much of the increase. Meanwhile, direct government payments are forecast at $47.4 billion, $19.5 billion above 2025. Farm-sector debt is also projected to reach $605.1 billion, up 4.6%. The numbers illustrate the continuing margin squeeze facing producers despite stronger gross revenues in portions of agriculture.

Corn Export Sales Surge as Mexico and Japan Step Up Purchases

New-crop U.S. corn export sales jumped to 1.99 million metric tons during the week ended Aug. 27, nearly doubling the previous week's 1.07 million tons, according to USDA data released Thursday.  Mexico led buyers with 665,000 tons, followed by Japan with 371,800 tons, an unidentified buyer with 353,300 tons and Colombia with 198,600 tons. Soybean sales totaled a still-strong 1.95 million tons, although that was down from 2.48 million tons the previous week. China accounted for 972,000 tons. The figures provide an encouraging demand signal as U.S. farmers move into harvest. Strong exports could be especially important for corn producers confronting another large crop and substantial domestic supplies.

Tyson Cuts Outlook as U.S. Cattle Shortage Hammers Beef Business

Tyson Foods lowered its fiscal 2026 profit and sales forecasts Thursday as the historically tight U.S. cattle supply continues to pressure meatpackers. The company now expects adjusted operating income of $1.85 billion to $2.05 billion, down from its previous $2.1 billion-to-$2.3 billion forecast. Tyson expects its beef operation alone to lose $625 million to $775 million. Tyson cited volatile cattle prices and what it called one of the most severe cattle shortages in U.S. history. The announcement provides another indication of how profoundly the cattle cycle is affecting the entire beef supply chain. Ranchers have benefited from historically strong cattle values, but processors face high procurement costs and reduced slaughter supplies. Tyson has already announced significant restructuring of its beef-processing network.

Black Sea Disruptions Keep U.S. Grain Markets Supported

Escalating attacks affecting grain vessels and port infrastructure in the Black Sea continue to inject a geopolitical premium into U.S. grain prices. Corn futures eased slightly Friday morning after recently reaching three-year highs, while wheat remained supported by concerns over global grain availability. Russian exporters have increasingly had to reroute shipments as disruptions affect traditional Black Sea and Sea of Azov channels. December corn was around $5.40 a bushel early Friday, while December wheat was near $7.54 and November soybeans were above $13.14. For U.S. farmers, prolonged Black Sea disruptions could increase demand for American corn and wheat, but the situation also means substantially greater market volatility heading into the U.S. harvest.

Midwest Heat Raises Late-Season Corn and Soybean Concerns

Extreme heat remains a major agricultural issue across a large portion of the Corn Belt. Heat warnings stretch from Iowa and Kansas through Illinois and toward Ohio, with heat indexes expected to reach 105 to 110 degrees in some areas. The timing matters. USDA reported last week that 13% of corn was mature as of Aug. 30, while 13% of soybeans were dropping leaves. That leaves portions of both crops vulnerable to late-season stress. The immediate concern may be greatest for soybeans still filling pods, although prolonged heat can also accelerate corn maturity and reduce grain fill. Livestock producers face additional concerns involving animal stress, water consumption, and weight gain. Markets are now balancing the approaching harvest against uncertainty over whether the heat will trim final national yields.

Ethanol Blend Rate Reaches Record as E15 Expands

The U.S. ethanol blend rate has reached a record level, providing another positive demand signal for corn producers. Federal energy data cited by the Renewable Fuels Association shows the 12-month average ethanol blend rate reaching 10.58%, while average ethanol content exceeded 11% for a second consecutive month in June. Increased E15 and E85 use is allowing ethanol consumption to rise beyond the traditional E10 blend wall. At the same time, ethanol production averaged about 1.11 million barrels per day during the week ended Aug. 28, while inventories declined to roughly 25 million barrels. The development is significant because incremental increases in ethanol blending can translate into substantial additional corn demand without requiring an increase in total U.S. gasoline consumption. California's movement toward broader E15 availability could provide another major demand opportunity.

Tuesday Watch List

Markets

Tuesday will feature USDA's usual Monday releases delayed by the Labor Day holiday. This includes Export Inspections at 10 a.m. CDT followed by the weekly Crop Progress report at 3 p.m. CDT.

Weather

A strong system that moved through the Canadian Prairies over the holiday weekend is winding down there on Tuesday, but still producing some rain and breezy winds across the border area. The system's front is stretched out from Nebraska into Minnesota early in the morning, where a band of showers and thunderstorms has formed. This front will be the source of most of the precipitation today across the North-Central U.S. and may include some severe weather around Iowa this afternoon and evening. Additional spotty showers will develop near the Gulf as well.