After a mixed start to 2026, the U.S. Labor Economy has rebounded with an average of 172,000 jobs added in May, 179,000 jobs in April, and 214,000 in March. This is good news after losses in February and early expert predictions for job losses in April. Healthcare, transportation, leisure and hospitality, and warehousing led job gains while the federal government continued to shed jobs. Meanwhile, large tech layoffs did make headlines in early spring with Amazon, Meta, and GM announcing job cuts in technology departments, some specifically emphasizing automation due to AI. Overall, the unemployment rate remained steady at 4.3% in April and May despite AI concerns and a broader concern for the U.S. economy based on geopolitical factors that could lead to slowing economic growth.

The U.S. real GDP increased at an annual rate of 2.0% in the first quarter of 2026. This was a marked improvement from Q4 of 2025 at 0.5%. Increases were attributed to increased exports, government spending, and investments. Consumer spending slowed somewhat and imports increased during the same time.

Inflation hit a three-year high in April with an increase of 3.8% year over year and 0.6% over the past month. The headline grabbing news regarding inflation is in oil prices and the pain at the pump. The ongoing conflict between the U.S. and Iran has led to the closure of the Strait of Hormuz, a key shipping lane for oil and fertilizer. Not only has gasoline jumped, 28.4% for the year, but other prices have been on the rise of late as well. The BLS’ food at home index increased 2.9% over the past year.

Somewhat unsurprisingly after the latest inflation numbers, the Fed left the federal funds rate unchanged during their most recent meeting, in a range between 3.50% and 3.75%, citing economic uncertainty and rapidly increasing inflation as a reason not to continue immediate rate reductions. In fact, the likelihood of additional rate cuts this year may have been lessened after the recently released inflation data and disagreement among the FOMC during their last meeting. The Fed’s goal is an annual 2.0% inflation rate. The recent energy spikes have put to question whether inflation can be tempered by the currently established rates. Powell has described the jobs market as relatively balanced, which does allow inflation to be the main driver for interest rate discussions. Meetings will now be led by new Fed Chair, Kevin Warsh, confirmed by the Senate in May. Powell will stay on the board of governors for the time being to wrap up the investigation into the new building construction.

Corn and Soybeans

The May 2026 WASDE report points to a generally balanced outlook for corn and soybeans for the upcoming season. Corn production is expected to remain historically large at 16 billion bushels, the second largest on record behind 2025. Planted acres for the 2026 season are estimated at 95.3 million acres, down 3.5 million acres from the year prior. Demand for U.S. corn is expected to soften slightly due to lower feed use and a slight decline in exports however, the U.S. remains the largest exporter of corn by a wide margin ahead of Brazil and Ukraine. As a result, ending stocks are projected to tighten somewhat but remain at comfortable levels, keeping the market fundamentally stable. Prices are forecast to improve modestly to $4.40 per bushel, up $.25. Overall, the corn outlook remains neutral with ample supply cushioning the market. 

In contrast, the soybean outlook appears more optimistic, with stronger demand and pricing. Soybean production is projected to increase 173 million bushels from last year based on higher acreage and yields. Demand, particularly from domestic crush use driven by biofuel demand, continues to outpace supply gains. Much of this biofuel demand is supported by the EPA’s Renewable Volume Obligations for 2026 and 2027. This stronger demand profile is expected to reduce ending stocks and tighten the stocks-to-use ratio, providing firmer price support. Soybean prices are forecast at $11.40 per bushel, up from the 2025/26 season average of $10.40, with soybean oil forecast at $.70 per pound, up $.07.  

Taken together, the soybean market enters the year with more constructive fundamentals while corn remains well-supplied but not burdensome. 

Dairy

After a slow January and February from a margin standpoint, producers’ income over feed costs using Dairy Margin Coverage (DMC) continued to improve through April, rising to $10.54/cwt., the highest mark since September 2025. Strong nonfat dry milk (NDM) and whey prices are boosting Class IV and Class III milk prices while feed costs have remained relatively low. The rise in the NDM price is being driven by a combination of tight supply and strong demand, particularly for dairy proteins. Dairy protein demand is reshaping the industry with growth in demand for dairy proteins used in ready-to-drink protein shakes, sports nutrition products, high protein yogurt, etc. As processors can often earn more by producing milk protein concentrates and related ingredients than by producing traditional nonfat dry milk, skim milk that historically would have become NDM is being diverted elsewhere, tightening supply. The U.S. is one of the world’s largest suppliers of NDM and demand from key importing countries in Latin America and Asia has remained strong. Mexico in particular continues to buy U.S. milk powder. The increase in price for NDM has played a key role in the jump in Class IV milk prices. Beef income from culling cows and selling crossbred calves continue to provide significant benefits to dairy producers’ bottom lines as well. After a fourth quarter decline in calf prices, crossbred calf prices continue to reach new highs and are nearing $2,000 per head.

Through April, dairy producers continue to add cows with the national dairy herd growing to 9.645 million head, the highest headcount since 1993 and 190,000 more than April 2025. On top of a larger herd, milk yields continue to increase. This growth in both milk yields and total cows will continue to require strength in the U.S. Dairy export markets.

Moderate feed costs, high beef revenue, and the recent surge in milk prices are providing economic incentives for producers to continue boosting milk output. The positive outlook and economics suggest milk output and growth will likely continue. Additional risk management enhancement opportunities are forthcoming with insurance products for dairy, specifically LGM-Dairy, LRP and DRP that will be welcomed to offset price risk of a growing milk supply.

Pork

While market hog prices have remained at profitable levels, continuing the trend per Iowa State’s farrow-to-finish profitability model, the margin opportunities provided by commodity prices during the Q1 and futures have decreased by early June. Break-even hog prices have increased based on feed costs and general inflation. While the CME Lean Hog Index has been rangebound between $90-$92/cwt., June-Aug lean hog futures markets have fallen by $12-$15/cwt. from the contract highs put in mid-March. Weaknesses in ham and belly prices have resulted in the Pork Cutout struggling to reach and stay above $100/cwt., down 5% from a year ago.

Disease, primarily PEDv and PRRS have greatly impacted weaned pig production this winter with weaned and feeder pig prices approaching 2014 highs in Q1. Prices have fallen in Q2 but are still well above historic averages. Cases of PEDv are up significantly nationally and well above the average of recent years. The production issues provide some optimism for higher hog prices for late Q2 and Q3 with expected lower hog slaughter volumes. However, carcass weights have been increasing given relatively stable feed costs and greater finishing capacity. Disease pressure has also resulted in increased sow farm depopulation and repopulation programs resulting in a 1.5% decrease in the U.S. sow herd from a year ago per the March 26 USDA Hogs and Pigs Report. This reflects the smallest U.S. sow herd reported in March since 2014 at 5.89 million.

Market hog inventories are up slightly from March 2025 but down from December levels. Pigs per litter from Dec-Feb continued an upward trend to 11.90, a 2% increase from last year, and well above expectations given widespread disease challenges. Imports of weaned pigs and feeder pigs from Canada have increased this year based on reduced domestic availability. Herd health continues to drive wide variance in production and profits across farms. With good farm health and stability or improvement of hog prices and feed costs, 2026 still provides opportunity for a good year for pork producers.

 

To view the rest of the 2026 Summer Partner articles please click here.