Prospective Plantings Report and Oil Volatility Outlook

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The last day of March brings the closely watched annual Prospective Planting report, along with a Quarterly Grain Stocks report, both of which continue to shape expectations for the upcoming growing season.

Prospective Plantings Report Gives Glimpse at Potential Mix of 2026 Crops

From an agricultural economics perspective, the United States Department of Agriculture's (USDA) Prospective Plantings report remains one of the most closely watched data releases in row crop markets. This year’s numbers, based on a National Agricultural Statistics Service (NASS) survey of farmers conducted at the end of February and early March, offered a few small surprises relative to market expectations.

USDA estimates show intended corn plantings at 95.3 million acres for 2026. While this figure came in above most pre-report predictions and above USDA’s February Outlook projection of 94 million acres, it is down 3% from 2025's actual planting acreage of 98.8 million acres. Soybean plantings are projected at 84.7 million acres, landing below most pre-report estimates and just under USDA’s February projection of 85 million acres, though still up 4% from last year's 81.2 million acres.

Going into the report, there were a few reasons to believe corn acreage would not drop as much as some analysts expected. Strong demand signals and good yields for corn last fall, when many producers were making seed and fertilizer decisions, likely helped corn remain a strong choice in many operations despite lower prices.

That said, there are important caveats to this dataset. The USDA survey began data collection just prior to the March spike in input costs, and the response rate was relatively low, which could influence how these intentions ultimately translate into actual planted acreage. In addition, planting intentions are always just that: intentions. Weather and many other factors will ultimately shape what gets planted across the countryside in the coming months.

This divergence is becoming more pronounced in the 2026 outlook. Corn reflects the potential for large production and ample supply, but also strong demand that may prove more resilient than expected. Soybeans, on the other hand, continue to show comparatively softer demand signals, now further complicated by geopolitical uncertainty and delayed trade discussions.

Reports that the Trump administration asked China to delay a planned summit with President Xi Jinping—expected to include discussions on agricultural trade—added pressure to soybean markets. In response, soybean futures traded limit down (-$0.70 per bushel in one trading day) in mid-March, as traders quickly priced in potential risk to U.S. soybean exports. Over the following week, soybean futures saw roughly a $1.00 trading range, underscoring just how sensitive the market remains to U.S.-China relations. While some of those losses were later recovered, soybean prices remain particularly sensitive to global trade disruptions—particularly those involving China, the largest importer of U.S. soybeans.

Taken together, these reports suggest a 2026 outlook defined by ample supply, uncertain demand, and rising macroeconomic pressure.

Interest Rates, Inflation and Jobs: Mixed Signals for the Economy

While agricultural markets digest USDA data, geopolitics and weather, the broader macroeconomic environment is sending mixed—and at times conflicting—signals.

At the March Federal Open Market Committee (FOMC) meeting, the Federal Reserve made no changes to the Fed Funds rate, holding steady at 3.50%–3.75%, a move that was widely expected by economists and markets. However, stability at the monetary policy level hasn’t translated to calm in broader financial markets.

Market-based interest rates, particularly longer-term yields, have been edging higher, driven by a combination of geopolitical tensions, rising debt concerns and shifting expectations around future Fed policy. Earlier in the year, markets had largely “priced in” two rate cuts for 2026. Now, some of that optimism is being unwound as new uncertainties, particularly around global energy prices, have emerged.

In simple terms, markets couldn’t fully anticipate the events of March and may have gotten ahead of themselves. With renewed inflation concerns, particularly tied to rising energy and related goods costs, those anticipated rate cuts are no longer a given, and that shift is pushing bond yields and variable interest higher.

The Fed’s own commentary and economic projections reflect this uncertainty. To further underscore this, they noted in their March meeting press release that “the implications of developments in the Middle East for the U.S. economy are uncertain.” The FOMC “dot plot” from March—where each dot represents a committee member’s projection of where the Fed funds rate will trend—still points to an average of one rate cut (-0.25%) this year, suggesting policymakers may continue to ease rates later in the year. But the likelihood may be waning.

Labor: A Temporary Bright Spot?

The Fed’s primary decision drivers are labor market conditions and inflation—and recent labor data offered a bit of optimism.

The April Bureau of Labor Statistics Job Situation report showed 178,000 jobs added in March and an unemployment rate of 4.3%, an improvement over February's 4.4%. After recent softness in job growth, this was a welcome move in the right direction and gives the Fed more flexibility to maintain a “wait-and-see” approach to rates.

However, there is still some skepticism about how durable this strength will be. March’s rebound could be temporary rather than the start of a sustained trend.

Inflation: Heating Back Up

If labor data provides some breathing room, inflation is doing the opposite.

While the Fed’s preferred measure, the Personal Consumption Expenditures (PCE) price index, will not be released until after this article is published, other indicators suggest inflation is re-accelerating and well beyond the Fed’s target of 2% annual inflation.

The most recent Producer Price Index (PPI) for February, which measures wholesale inflation, showed prices rising 0.7% month-over-month and 3.4% year-over-year, marking the highest annual increase in a year. Importantly, this data does not yet fully reflect the latest surge in energy prices, suggesting further upward pressure could emerge in coming months. The PCE price index for March, which will include higher energy prices due to the strained oil supply chain, won’t be released until early May. The March PPI report is scheduled for release in mid-April.

Because PPI is often viewed as a leading indicator for consumer inflation, this trend raises concerns that inflation could shift from persistently sticky but stable back into a more problematic range.

Energy Volatility: The Wild Card

Underlying much of this uncertainty is one key variable: oil.

Over the past month, both West Texas Intermediate (WTI) and Brent crude have surged at times above $100 per barrel, with significant price swings along the way. That level of volatility makes economic forecasting particularly challenging.

Energy prices don’t just affect fuel costs; they ripple across the entire economy. From fertilizer and chemical inputs to transportation surcharges for moving goods and plastics, oil is directly or indirectly embedded in nearly every aspect of the agricultural and food value chain.

This creates a compounding effect: higher energy prices can push up inflation, which influences interest rates, which in turn affects borrowing costs and investment decisions across rural communities.

It’s not just economists who are uneasy about recent macroeconomic data points. Measures like the University of Michigan Consumer Sentiment Index show growing concern among consumers about the economic outlook. 

That hesitation matters. Consumer confidence influences spending, which drives economic growth and ultimately demand for food and agricultural products.

The Uncertain Bottom Line

Taken together, the macroeconomic backdrop is anything but clear-cut. An unchanged Fed policy stance, mixed labor data, rising inflation pressures and volatile energy markets are pulling the outlook in different directions and creating a high degree of uncertainty.

For agriculture, this means navigating not just weather and supply-demand fundamentals, but also a broader economic environment that remains highly fluid amid geopolitical unknowns. With planting season already underway in the South and just around the corner for those of us in more northerly regions, the coming weeks will be critical in shaping market direction. 

Want to keep up-to-date on the latest trends affecting agriculture? Subscribe to the AgEdge podcast. Our latest episode highlights the topics covered here and dives deeper into current agricultural policy dynamics in Washington, D.C. Or join Compeer Financial for our next AgriMindset webinar, Build a People Strategy for Smarter Farm Operations, on April 15 at 1:00 p.m. This webinar will be focused on farm transition strategies. If you can’t join live, you can watch the recording at any time or listen to the AgEdge podcast version the following day wherever you get your podcasts. 

The information provided is accurate to the best of the author’s knowledge at time of publishing. It is presented “as is” with no guarantee of completeness, accuracy or timeliness, and without warranty. The information is educational in nature and not investment, legal, accounting, tax or other advice of any kind.