Global Grain Market Overview

Key Market Developments

Soybean prices have come under pressure as China imposed tariffs on U.S. energy and agricultural equipment in response to President Donald Trump’s 10% tariff on Chinese imports. The move raises concerns over a renewed trade war, which could threaten U.S. agricultural exports. Historically, U.S. soybean exports to China dropped from $14 billion in 2016 to just $3 billion in 2018 due to previous tariff disputes.

USDA’s latest export inspections report for the week ending January 30 showed mixed trends. Corn inspections reached 1.252 million tons, while soybeans totaled 1.013 million tons, an increase from the previous week’s 738,000 tons but still below last year’s levels. Wheat inspections came in at 253,000 tons, reflecting weaker export demand.

U.S. soybean crushings climbed 6.6% year-over-year in December to 217.7 million bushels, driven by strong domestic demand for soybean meal and oil. However, corn used for ethanol fell 2.3% from a year earlier to 473.2 million bushels, with distillers’ dried grains with solubles (DDGS) production also declining to 1.876 million tons. The drop in ethanol demand could weigh on corn prices in the coming months.

In Brazil, soybean harvest progress remains slow, reaching 9% as of January 30, compared to 16% at the same time last year. Delays persist in key producing states, with improved conditions in Mato Grosso but ongoing dryness in Rio Grande do Sul. Celeres raised its forecast for Brazil’s 2024/25 soybean crop to 174 million tons, while StoneX revised its estimate slightly lower to 170.9 million tons due to concerns over dry weather in key areas.

Russia’s wheat exports are projected to decline significantly in February, with expectations that volumes will halve year-over-year due to low profitability and shrinking supplies. SovEcon also lowered its 2024/25 Russian wheat export forecast to 42.8 million tons and cut Ukraine’s estimate to 16 million tons.

Weather concerns continue to impact crop conditions across key regions. In the United States, winter wheat conditions improved in Kansas, where 50% of the crop is rated good to excellent. However, conditions in Oklahoma and Texas have deteriorated due to persistent dryness. In South America, Argentina’s corn and soybean crops are struggling with worsening drought, while Brazil’s second corn crop (safrinha) planting has been delayed. Dry conditions in Australia are also raising concerns over sorghum and cotton yields.

China has ramped up corn stockpiling efforts in its northeastern provinces, which could shift global trade flows. Increased domestic reserves may reduce China's demand for imported corn, particularly from the U.S. and Brazil, impacting international markets.

The European Union maintained its grain production forecast for the 2024/25 season at 255.8 million tons, with expectations for soft wheat at 111.9 million tons, barley at 49.4 million tons, and corn at 59.5 million tons. Despite weather challenges in certain areas, supply expectations remain stable.

India’s palm oil imports have fallen sharply, plunging to an 11-year low in January. Imports dropped by more than 50% to 242,000 tons due to a rare price premium over soybean oil. This shift could have broader implications for global vegetable oil markets, supporting demand for soybean and sunflower oil.

New U.S. tariffs on Canada, China, and Mexico are expected to disrupt agricultural trade. The U.S. administration has imposed a 25% tariff on certain goods from Canada and Mexico, with an additional 10% levy on Chinese imports. These actions have sparked fears of retaliatory measures that could affect agricultural exports and commodity flows.

A fire at a key grain transshipment hub in Brazil’s Mato Grosso region has disrupted logistics, delaying soybean exports. The incident adds to existing transportation challenges as Brazil’s harvest progresses, potentially affecting short-term availability in export markets.

Meanwhile, new U.S. tariffs on Canadian potash could increase fertilizer costs for American farmers, raising input prices and potentially impacting grain production margins. Higher fertilizer costs could influence planting decisions in the upcoming season, adding uncertainty to U.S. grain markets.

Crop Market Breakdown

Wheat

Wheat markets remain volatile, with Russian exports expected to drop sharply in February due to lower profitability and tight supplies. SovEcon cut its 2024/25 export forecast to 42.8 million tons, while Ukrainian wheat exports are also projected to decline. U.S. winter wheat conditions showed improvements in Kansas but deteriorated in Oklahoma and Texas. Meanwhile, international demand remains steady, with Tunisia and Jordan continuing to seek wheat purchases.

Corn

U.S. corn export inspections reached 1.252 million tons for the week ending January 30, with Mexico being the top buyer. China’s increased domestic stockpiling in its northeastern provinces may reduce its reliance on imports, potentially impacting global trade flows. In Brazil, the second corn crop planting is lagging, with delays raising concerns about overall production. Despite increased estimates from some analysts, dry weather risks continue to loom over South American corn production.

Soybeans

Soybean prices have faced downward pressure due to China’s newly imposed retaliatory tariffs on U.S. goods and Brazil’s progressing harvest. As of January 30, Brazil’s soybean crop is 9% harvested, lagging last year’s pace. While Celeres has raised its production forecast to 174 million tons, StoneX revised its estimate down to 170.9 million tons, citing ongoing weather risks. Argentina’s soybean crop is also facing worsening drought conditions, raising concerns about final yields.

Geopolitical and Trade Developments

Trade tensions between the U.S. and China continue to impact agricultural markets. China’s decision to impose tariffs on U.S. goods, including agricultural equipment, could dampen demand for American grain exports. Meanwhile, Brazil and China are strengthening trade ties, with COFCO securing new agreements for soybean shipments. These developments may shift global trade flows and impact U.S. export competitiveness.

Weather and Supply Chain Risks

Weather conditions remain a key market factor, with dry weather in Argentina, planting delays in Brazil, and mixed winter wheat conditions in the U.S. all contributing to uncertainty. In addition, logistical disruptions, such as the fire at Brazil’s grain transshipment hub and low water levels in key U.S. river transport routes, could impact exports in the coming months.