Risk of Poor Yields in US Barley, Oat, and Winter Wheat and Tariffs Raise Sourcing Concerns

Andy Paterson • April 22nd, 2025.

The upcoming season for oats, winter wheat, and barley poses challenges for US grain production, with ClimateAi’s advanced weather models seeing signs of risks for poor yields for all three crops. While still early in the year, these risks warrant monitoring from sourcing managers as the season progresses.

The current tariffs on some of the countries where sourcing managers would offset US domestic yield reductions are currently under tariffs, which brings more complexity into the procurement decision-making process.

Grains are critical crops in the US for food production, animal feed, and beverages (mainly beer). To help sourcing managers understand how extreme weather is predicted to impact the yield of these three essential crops over the coming season, this blog will look at ClimateAi predictions and give critical insights into how they can prepare for price volatility due to potential domestic yield reductions and tariffs. 

In a season marked by global uncertainty, understanding how weather could shape domestic yields may offer a rare layer of foresight.

How Weather Might Impact US Grain Yield in 2025

2025 is expected to be one of the hottest years on record, not quite reaching the record-breaking 2023 and 2024 levels, but it is predicted to be in the top 3 hottest years ever. Since grains are typically colder climate crops and are sensitive to heat stress, 2025 is expected to be a low yield year for US grain. 

While it is still early in the season, early signals from ClimateAi’s Yield Outlooks tool point to risks of a poor yield for three key grain crops in the upcoming year, which should be closely monitored as the season progresses. Here is how each crop might be impacted: 

Oats Yield in 2025

Oats are primarily produced in the Northern states in the US for domestic production or imported from Canada, which makes up more than 90% of US oat imports. Here is how Climate AI’s Yield Outlook predicts weather might impact oat yields in the coming growing season:

• Oat yield is at risk of being below normal in the coming growing season, with a 6.85% yield reduction against the historical baseline.
• Western producers (Montana, South Dakota, and North Dakota) will likely be more impacted than Eastern ones (Wisconsin, Minnesota, and Iowa).
• The states with the most significant production, North Dakota, South Dakota, and Minnesota, are expected to be the most heavily impacted states. 
• Oats are currently in their planting stage, so conditions may change, especially as we get closer to the flowering stage, when the crop is most exposed to impacts from heat and drought.

Winter Wheat Yield in 2025

Wheat is the third largest crop in the US by acreage, and winter wheat is the largest wheat crop.  Here is how Climate AI’s Yield Outlook predicts weather might impact winter wheat yields in the coming growing season:

• Winter wheat yield is at risk of having a below-normal season in 2025.
• As shown by our map, there is a significant disparity in expected yield for each growing region.
• Kansas, which produces almost a quarter of the US winter wheat (22%), is expected to have a higher yield due to temperatures not dropping too low and not being too high to impact yield. 
• However, other large producing states like Washington and Montana have reduced yields. 
• Winter wheat is currently “in season”, meaning the crop is actively growing, and weather conditions over the next few weeks will be critical for final yield outcomes.

Barley Yield in 2025

Barley is another grain crop grown mainly in Northern states, with more than 50% of production from just two states (Montana and Idaho). Here is how Climate AI’s Yield Outlook predicts weather might impact barley yields in the coming growing season:

• Barley yields are at risk of having a below normal year across the country against the historical baseline.
• Due to increased heat and droughts, Idaho and Montana, which produce more than 50% of the US barley (32% and 22%), are at risk of having reduced yields. 
• Every state is likely to have a poor yield, plus Canada, the US’s primary provider of barley, is currently at a higher risk than the US to have a poorer yield season.  
• Barley is currently in the early planting stages, meaning the yield predictions could change as the season progresses and the crop moves into growing and flowering stages.

Sourcing Impact of Reduced Yields and Tariffs

Reduced yields for these three crops could have a significant impact on costs. For example, in 2021-22, a drought led to a yield reduction in oat production by around 22% compared to the previous year, contributing to an increase in the futures cost of oats by 125%.

For the other grain crops, it is a similar story:

• Winter wheat: In 2024, a poor yield in Eastern US states resulted in more than a 25% price increase.
• Barley: In 2021, a drought in the Western US Plains resulted in a 33% reduction in Barley yield, increasing prices.

In 2025, tariffs will increase the cost of imports. Grain is covered in the United States Mexico Canada Agreement (USMCA), meaning grain from the US’s largest grain trading partner Canada is not currently covered by tariffs. Other key trading partners, like the EU, UK, and Australia for certain grains, are under a blanket 10% tariff for the next 90 days, after which they may increase. 

With so much tariff uncertainty, there has never been a more important time to understand both domestic and international production volumes to bring a level of certainty for better decision-making. 

What Procurement Teams Should Do in 2025 to Prepare

While US grain prices will inevitably be impacted by reduced yields and tariffs on imports, there are some steps companies can take to ensure supply continuity and reduce costs. 

Get Early Warnings on Yields  

Get a highly accurate, localized, and nuanced understanding of how extreme weather might impact yields from the regions you typically buy from and base your sourcing strategies and decisions on this information. This will enable you to:

• Find alternative sources as early as possible.
• If it is before the planting season, work with suppliers to adapt planting timing and type of seed. 
• Create contracts with pricing earlier in the seasons to lock in costs. 

Find Alternatives Domestically or Internationally

With so many US grain growing regions at risk of having below normal yields, sourcing managers will have to closely monitor the US season as it progresses and consider alternative areas to source oats, wheat, and barley from.

• Oats: While the largest producing states are at risk of having high yield reductions. States that produce slightly less, like Wisconsin and Iowa, have smaller yield reductions, where there may be lower spot prices. Canada is also a consideration. However, the growing season has not started yet there. 
• Winter Wheat: Some major growing regions are at risk of low yields. However, the largest and third largest growing regions, Kansas and Oklahoma, are predicted to have above normal yield seasons, where sourcing managers should focus and equalize costs. Alternatively, France is expected to have an above normal yield, which could lower prices there.
• Barley: With yield at risk of being down across the US, sourcing managers may have to look internationally for lower costs. Canada is typically a consideration here, but yield is at risk of being lower than US yield. Again, France is a stand-out region where yields are likely to perform above the normal historical baseline, so costs could be reduced. 

In addition to finding alternatives for the same crop, in some cases, grains can be swapped out in things like cereals and animal feed, like for like. So, considering that the national barley crop is most at risk to fare poorly, sourcing managers may opt for oats or wheat. 

Factor in Global Tariffs

When calibrating the cost of imports against increased domestic prices due to weather-induced reduced yields, you must now consider tariffs. 

Imports are less of an issue for winter wheat as the majority is grown domestically. However, certain specialized winter wheat still needs to be imported. Most of that wheat comes from the EU, which is currently under a 10% tariff but could increase to 20% in July 2025. Oats and Barley may be more impacted by tariffs.

• Oats: 90% of US oat imports come from Canada. Canada’s 25% tariff does not currently impact agricultural products, but that could change. Sourcing managers should consider other low-tariff oat producers like the United Kingdom (10%) as a backup.
• Barley: Again, with barley, Canada is the leading provider. But, sourcing managers should consider other major producers with lower tariffs, like Australia (10%).

The current US tariff situation is highly fluid. Sourcing managers should consider all of their options and consider acting in the next 90 days to lock in international prices before they increase.

How ClimateAi’s Weather Insights Can Be Your Competitive Advantage 

2025 will be an extremely complex year for making grain procurement decisions, with a warm year expected to reduce yields of both domestic and some international crops and global tariffs. 

Tariffs will have both direct and indirect impacts on crop prices and are something every sourcing manager is considering and, in most cases, is easily calculated (just add the tariff % to the cost). However, yield is just as important in pricing. Knowing how yields are impacted by fluctuations in weather can be a differentiating factor in your sourcing strategy. 

To gain the upper hand in this year’s market, the more you know ahead of time, the better. Climate AI’s Yield Outlooks tool will enable you to make better choices on where and when to buy your chosen crop to get the best possible value, which you can pass on to consumers.

This blog provides a high-level overview of early season insights from ClimateAi’s Yield Outlooks tool. For real-time, localized forecasts and strategic recommendations, customers get exclusive access through our software platform