North American Agribusiness Quarterly Q2 2026

Inflation is returning to the system, but this cycle is being driven by costs rather than demand. Energy is moving through the value chain, lifting input, processing, and logistics costs at a time when customers are increasingly constrained. The Iran conflict and disruptions around the Strait of Hormuz sit behind much of the pressure, with food and beverage inflation expected to run between 4% and 8% in 2026. Pricing is no longer keeping pace with costs, and margin pressure is building across the supply chain. At the same time, demand is becoming more uneven, with trade-down behavior gaining traction, while premium segments remain relatively resilient.

Weather and geopolitics have re-emerged as primary market drivers, but their impacts are uneven. A developing El Niño, potentially one of the strongest on record, is shifting risk to the edges of the season, particularly fall frost and global production variability. Wheat has become the focal point, with drought and frost driving the smallest US crop in decades and tightening global supply. Corn and soybeans present a contrasting picture, with strong planting progress pointing to large crops and reinforcing an already well-supplied global market.

This divergence extends across the broader system. Energy-driven disruptions continue to pressure logistics and input markets, with fertilizer and chemical costs expected to remain elevated into 2027. Animal protein markets are also split. Cattle supplies remain tight as drought slows rebuilding, while pork production is constrained by disease and softer domestic demand. In contrast, poultry and dairy continue to expand, with production growth weighing on prices in some segments.

Overall, the system is moving into a more fragmented phase. Cost pressure is persistent, demand is uneven, and performance is increasingly determined by product mix, supply exposure, and positioning along the value chain rather than by broad macro direction.