Wheat Prices Jump, but Montana Farmers Say Profits Are Still Hard to Find
Wheat has climbed to about $6.45 a bushel as U.S. production hits historic lows, but fertilizer, fuel and labor costs are keeping Montana farm margins tight.
U.S. wheat prices have climbed to roughly $6.45 per bushel in 2026, up from about $4 a year ago, as drought and shrinking supplies push national production toward its lowest level since 1971. Yet Montana farmers harvesting this August say the rally is barely translating into profits because fertilizer, diesel, machinery and labor remain historically expensive. The contradiction matters across the U.S. grain sector: higher commodity prices are offering producers some relief, but production costs continue to consume much of the additional revenue, leaving farm margins vulnerable despite tighter wheat supplies.
In Montana's Flathead Valley, farmer Tryg Koch is harvesting what could be one of his strongest wheat crops after June brought roughly six inches of rain and cool temperatures. But the economics remain challenging. Koch told the Flathead Beacon that his cost of production is around $6 per bushel, leaving little margin at current wheat prices. His combine, purchased used for $160,000, can harvest about 10 acres and as much as 900 bushels per hour, but consumes roughly 100 gallons of fuel and costs about $400 per day to operate during harvest. For producers, strong yields alone are no longer enough to guarantee meaningful profitability.
U.S. Wheat Supply Hits a 55-Year Low as Farm Costs Stay High
The supply side is providing support to wheat markets. According to USDA's August wheat outlook cited by the Flathead Beacon, U.S. wheat production is forecast at 1.531 billion bushels, the lowest since 1971, while total supplies are expected to decline 13% from last year. Winter wheat production across the Great Plains has fallen sharply after drought damaged yields in states including Texas, Oklahoma, Kansas and Nebraska. Fewer planted acres have added to the tightening. Globally, the Russia-Ukraine war and drought in Europe are contributing further volatility to a market already confronting unusually limited U.S. supplies.
But higher grain prices are colliding with an expensive production environment. American Farm Bureau Federation data cited by the publication show that farm production costs have increased about 40% since the 2018 Farm Bill, while labor costs are up 74% and fertilizer costs 54%. Montana Farm Bureau Federation President Cyndi Johnson said she recently paid $850 per ton for urea, roughly 25% more than before the war in Iran began. Fuel and machinery repairs are also consuming cash during harvest, when her operation can use at least 300 gallons of diesel per day.
Fertilizer markets remain particularly exposed to geopolitical disruption. Countries connected to the Persian Gulf account for nearly half of global urea exports and about 30% of ammonia exports, according to American Farm Bureau Federation figures cited by the Flathead Beacon. High nitrogen costs are already changing planting decisions. Some Montana farmers are expanding peas, lentils and other pulse crops that require less fertilizer, although greater production has pressured those markets as well. The strategy can reduce input expenses, but shifting acres does not automatically solve the profitability problem when additional supply pushes alternative crop prices lower.
Labor adds another layer of pressure. Montana producers increasingly rely on the federal H-2A agricultural visa program as finding domestic seasonal workers becomes more difficult. State labor data cited in the report show more than 3,200 H-2A workers currently in Montana, while 2,800 producers are waiting for authorization to hire foreign agricultural labor. Documentation, housing requirements and administrative hurdles add costs for employers already operating on narrow margins. Koch said the challenge is especially acute during harvest, when crews may need to work six days a week and remain in the field late into the evening.
Even with wheat near $6.45, the numbers demonstrate why stronger commodity markets do not necessarily mean a healthy farm economy. Producers remain exposed to factors they cannot control - weather, global trade, geopolitical conflict, fertilizer markets and fuel prices - while machinery and labor expenses continue rising. With U.S. wheat production at a 55-year low, scarcity is finally supporting prices, but for Montana growers the central question remains unchanged: after paying the cost of producing the crop, how much money is actually left on the farm?
