Center for Agriculture and the Economy
Leveraging expertise from the Kansas City Fed, the Center provides timely analysis of industry developments and conducts ongoing research on the agricultural economy.
Drought is an Increasingly Important Factor for Many Agricultural Products
June 5, 2026
By Ty Kreitman
Drought risk has expanded and intensified in recent months and could materially affect production, markets, and revenues for many commodities and producers across key agricultural regions. About 60% of U.S. cattle inventories and hay acreage have been in at least moderate drought since early April, which is the highest two-month average since 2022 (top chart). Winter wheat exposed to drought also reached the highest level since 2022, while the average share of rice, peanuts and cotton in drought over that time increased to more than 90%, the highest since at least 2000 (bottom chart). In addition to the commodities shown below, drought has also persisted in western states where many specialty and permanent crops are prominent.
Notes: The calculations represent the portion of each commodity exposed to drought categorized as D1-D4 (moderate, severe, extreme, and exceptional) based on the intensity classifications used by the External LinkUniversity of Nebraska – Lincoln U.S. Drought Monitor. The calculation for cattle is based on the share of cattle inventories in areas experiencing drought categorized as D1-D4. The calculation for hay is based on the share of acreage in areas experiencing D1-D4 drought. The calculation for rice, peanuts, cotton, winter wheat, corn, and soybeans is based the share of production in areas experiencing D1-D4 drought. Rice, peanuts, and cotton is the average for all three individual crops and corn and soybeans in the average for both crops.
Sources: USDA, University of Nebraska- Lincoln National Drought Mitigation Center, and Federal Reserve Bank of Kansas City Staff Calculations.
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Through regular surveys, analysis and connections across the industry, the Kansas City Fed has had a longstanding focus on U.S. and global agriculture. Leveraging this expertise, the Center for Agriculture and the Economy serves as a resource within the Federal Reserve System by providing timely analysis of industry developments and conducting ongoing research on the agricultural economy. The Kansas City Fed is committed to understanding developments in the agricultural economy and gathering perspectives from rural America in order to include them in discussions on the national economy.
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