(Bloomberg) — Punishing temperatures swept across the US Midwest this week, prompting another round of heat advisories after weeks of sizzling weather. For America’s farmers, the sweltering conditions are bringing something they’ve been waiting years for: higher crop prices.
The heat’s threat to yields helped corn futures jump about 15% since the end of July, sending prices above the critical $5-a-bushel threshold to reach the highest levels since 2023. Those gains ripple through the farm economy, underpinning higher bids at grain terminals and elevators while also allowing growers to use futures contracts to hedge their risks.
Farmers like Iowa’s Dave Walton see the rally as a game changer.
“We’ve been fairly aggressive selling into this rally, and so we’re looking at black ink all the way across the board,” Walton said in an interview, speaking about profitable conditions on his farm. “If I would have sold even six weeks ago, we’d still have been in the red on some of it.”
Higher grain prices have raised hopes that an elusive rebound in the American farm economy is finally taking hold. Fresh data from the US Department of Agriculture show that farmers’ cash receipts from crops are projected to climb 6.1% year-over-year in 2026. And investors are wagering on a continued rally, with the net-bullish holding in corn futures reaching the highest on record, data issued Friday show.
But after years of depressed prices and rising costs, growers still want to see more evidence of sustained improvement before they start making big investments.
Walton embodies the limits of the budding recovery.
At this week’s Farm Progress Show in Iowa, Walton perused CNH Industrial NV’s New Holland brand’s latest tractors and crop sprayers as he searched for ways to improve his operation producing soybeans, corn and wheat. Timely rains in eastern Iowa have him expecting a “pretty good bean crop” and an average to below-average corn harvest. Still, he wants at least another year of solid profitability before spending on big-ticket items like machinery.
“There’s very little we can afford, so you’re window shopping,” Walton said on the show grounds outside of Des Moines.
Farm-equipment companies are anxiously awaiting a meaningful switch from window shopping to big purchases. Used-tractor markets have stabilized, and Deere & Co. and CNH have recently pointed to brighter conditions. But some executives say a broader recovery in machinery demand could still be some time away.
Scott Harris, president of CNH in North America, said that while the worst has passed, a global recovery for the farm economy is likely to be more L-shaped, with Europe and Brazil lagging the US.
“I am more optimistic about the upturn in the second half of 2027 after we see what gets in the bin this year, and get some stability in the markets,” Harris said in an air-conditioned pop-up office at the Farm Progress Show.
Excessively high temperatures and erratic rains trimmed US corn yields just as heat waves across Europe hampered the region’s grain harvests. Fighting between Russia and Ukraine is also disrupting Black Sea exports, adding to the tighter supply picture that’s lifted prices. China, meanwhile, has also picked up purchaes of US soybeans.
The Bloomberg Agriculture Spot Index, which tracks 10 major products, has jumped more than 20% since the end of June — fortuitous timing for American farmers who are looking to sell crops they’re just starting to harvest.
“This rally has been very welcome to us. And it feels like there’s some strength to this,” said Walton, who’s also a vice president of the American Soybean Association.
Equipment maker AGCO Corp. had trimmed its profit outlook when it reported second-quarter earnings July 30, but now is already noticing a shift. The company launched a new Fendt tractor at the Farm Progress event, where there were signs that farmer optimism is starting to translate into sales.
“We closed a dozen deals at the dinner last night, which is very unusual,” AGCO Chief Executive Officer Eric Hansotia said in an interview at the show, adding that it’s still early days in a recovery. “We sold nothing at the show last year, so that was a very positive comparison.”
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