Policy and Trade Dynamics

Trade policy developments and international purchasing strategies significantly shaped global grain flows this week, introducing both opportunities and challenges for major exporters.

Ukraine emerged as a central point of discussion with its ongoing debate around reintroducing a 10% export tax on rapeseed and soybeans—an initiative that had previously been rejected. The reconsideration of this measure comes at a time when Ukraine exports nearly all its rapeseed production and half of its soybeans. The move aims to support domestic processing industries and state revenues, yet it faces strong resistance from farming and food producer associations, who argue that the tax would reduce the competitiveness of Ukrainian oilseeds on the global market. If enacted, this could significantly tighten European oilseed supply in the short term, particularly impacting crushers in the EU who rely heavily on Ukrainian origin.

In a broader geopolitical shift, Ukraine’s wheat export expectations for 2025/26 are now set at 15 million tons, down from recent highs, largely due to new EU quotas introduced to replace the temporary post-invasion trade liberalization. These quotas, designed to appease protectionist sentiment in Eastern Europe, risk hampering Ukraine’s access to European buyers. Meanwhile, Ukrainian traders confirmed the first shipment of new-crop corn to Libya, marking a strategic export milestone that highlights Kyiv’s diversification efforts beyond traditional European destinations.

Russia, meanwhile, remains highly aggressive in its wheat export policy. Russian wheat with 12.5% protein is being offered below $200/ton FOB, sustaining its role as the market price-setter. With IKAR revising up its 2024 wheat output forecast to 84.53 million tons, Russia is positioned to flood global markets in the second half of the year, potentially squeezing U.S., EU, and Ukrainian competitiveness. Egypt’s GASC continued to diversify its sourcing, purchasing 470,000 tons of wheat from multiple origins, including Romania, Russia, Bulgaria, France, and Germany. This signals a hedging strategy by Cairo to mitigate weather or logistical risks in any single supplier country.

In Argentina, tax policy shifts triggered a significant short-term volume boost. Ahead of a July 1 increase in soybean export taxes from 26% to 33%, and soymeal/soyoil taxes rising to 31%, local farmers accelerated sales. June soybean exports surged to 4.71 million tons—double the amount from the same period in 2023. However, this front-loading is expected to result in a sharp decline in shipments in July and beyond, potentially disrupting supply chains in key importing countries.

In Brazil, updated crop forecasts from Datagro revised corn and soybean production upwards, to 134 million and 173.5 million tons respectively. This supports Brazil's ongoing strategic push to dominate export markets, particularly in Asia and the Middle East. As global buyers increasingly turn to Brazil for reliable supply amid geopolitical uncertainties in the Black Sea, its position as a top-tier supplier solidifies.

The U.S. saw declining export competitiveness this week. USDA grain inspection data revealed that U.S. wheat shipments were only 255,000 tons for the week ending June 19. Corn and soybean inspections also fell, totaling 1.47 million tons and 193,000 tons respectively. These weak figures reflect the dual impact of strong dollar valuation and increased competition from South America and the Black Sea. Japan, Mexico, and Germany remained the top buyers for U.S. grains, but overall demand softness is becoming more evident.

Additionally, lingering uncertainty surrounds China’s grain buying strategy. While no major Chinese purchases were reported this week, traders remain watchful of any surprise tenders, particularly for soybeans. China’s cautious behavior may reflect a strategic inventory build in Q1 and price monitoring rather than a shift in long-term sourcing.

In summary, global grain trade continues to be reshaped by new taxes, shifting alliances, and aggressive export strategies. The interplay between these forces is increasing price volatility and compelling buyers to diversify sourcing while producers adjust volumes ahead of regulatory and weather-related risk windows. The second half of the year is likely to see more fragmentation in trade flows and fierce price competition between major exporters.

Price Movements and Futures Trends

Wheat futures struggled to maintain momentum throughout the week. The July 2025 Chicago SRW contract opened Friday at $5.21 per bushel, reflecting a continued bearish trend from the previous sessions. The weakness stemmed primarily from disappointing U.S. export data, which showed sales of only 255,000 metric tons for the week ending June 19—down 40% from the prior week and well below trade expectations. In contrast, South Korea’s purchase of 82,000 tons of U.S. wheat and a revised upward estimate for EU wheat production to 128.2 million tons for 2025/26 added contrasting signals. Russia’s IKAR increased its wheat output projection to 84.53 million tons, reinforcing fierce global competition. Meanwhile, the International Grains Council (IGC) raised its global wheat production estimate by 2 million tons to 808 million tons, underscoring supply abundance.

Corn futures posted only marginal changes, with the July 2025 contract opening at $4.09½ per bushel on Friday. Sales for the 2024/25 crop totaled 741,226 metric tons—the lowest weekly level since early 2025—while 2025/26 crop sales reached a six-week high. Brazil’s corn outlook improved, with Datagro revising the 2024/25 estimate to 134 million tons and pegging the second crop at 108.5 million tons. Argentina’s harvest passed the halfway mark at 55.3%, while the IGC trimmed global corn production by 1 million tons, citing reduced carryout expectations. U.S. cash corn prices softened, reflecting lukewarm sentiment, and a sharp drop in open interest suggested trader repositioning ahead of the first notice day.

Soybean markets attempted a minor recovery but remained subdued. The July 2025 futures contract opened at $10.22¾ per bushel, down 2½ cents from the previous close. While U.S. export sales for the week reached 402,931 metric tons—an improvement year-over-year—they remained weaker than the prior week. Brazil continues to dominate with Datagro lifting its soybean forecast to 173.5 million tons. Meanwhile, soymeal futures hit multi-year lows, and soybean oil showed mild recovery. Despite a slight uptick in cash pricing, sentiment remained cautious due to global competition and weak U.S. demand.

Weather Developments Across Key Regions

Weather volatility played a significant role in shaping crop progress and yield expectations this week. In North America, rainfall patterns were inconsistent. The Midwest remained waterlogged, with ongoing showers slowing fieldwork while supporting crop development. Northern Plains states, including North Dakota and Montana, saw localized damage from storms, contrasting with drought-affected spring wheat regions that now represent 25% of planted area—a three-point increase from the previous week.

Argentina experienced beneficial dry conditions, allowing the soybean and corn harvests to advance while also accelerating wheat sowing efforts. However, frost threats lingered in southern Brazil, particularly in Paraná and Mato Grosso do Sul, where maturing second-crop corn is vulnerable. Early-week frosts in São Paulo further underscored weather-related risks.

The European Union faced continued stress from hot and dry conditions. Southern Europe, particularly Spain and Italy, experienced intense drought, although southern EU soft wheat yield projections improved to 6.05 tons/hectare, driven by robust expectations in the Mediterranean. In contrast, northern regions like France and the Benelux reported deteriorating prospects due to persistent dryness during grain-filling stages. MARS projections suggested a warmer and drier summer from the UK to the Black Sea.

Black Sea Region Update

The Black Sea region continues to play a central role in shaping global grain market dynamics, with a mix of policy shifts, trade activity, and agricultural developments across key countries like Bulgaria, Romania, and Ukraine.

In Bulgaria, energy and transport policy is intersecting with agriculture through the Ministry of Transport’s plans to purchase 20 biodiesel-fueled passenger trains. This move highlights a broader shift toward bio-based fuels in regional logistics, which could influence agricultural demand for oilseeds used in biodiesel production. Minister Nikolay Karadjov emphasized that biofuel integration is becoming increasingly viable and is now expected at all fuel stations. If implemented effectively, this could lead to higher domestic demand for oil crops such as rapeseed and sunflower—especially relevant given Bulgaria’s established presence in these sectors.

Romania is entering the 2025/26 season with a record expansion in rapeseed area, officially reaching 703,000 hectares—far above the 5-year average of 490,000 hectares. Market chatter even suggests planted areas might approach 800,000 to 1 million hectares, raising expectations for one of the largest rapeseed crops in the country’s history. However, production potential is tempered by reduced fertilizer use, which could limit yields. Sunflower seed (SFS) production is also rebounding sharply, with a forecasted 50% increase year-over-year and a 7% improvement over the 5-year average. Despite a poor 2024 crop, Romania’s sunflower exports remained resilient, driven by robust Turkish demand and favorable prices. However, local crushers have faced tight margins and were compelled to import Ukrainian crude sunflower oil for local refining—highlighting challenges in processing capacity and competitiveness in global oil markets.

Ukraine’s role as a key exporter remains significant. Egypt’s state agency Mostakbal Misr has reportedly purchased between 300,000 and 1 million tons of wheat for July–August 2025 delivery, with a portion sourced from Ukraine alongside Russian and Romanian volumes. The contract prices ranged from $250 to $258 per ton (CNF). These deals illustrate continued reliance on Black Sea origin wheat even as Egypt reduced overall wheat imports by 30% in the first half of 2025 compared to the previous year. The pullback in Egyptian demand comes after large purchases in late 2024, but Black Sea exporters remain among the most competitive globally, especially amid ongoing favorable pricing out of Russia and the steady flow of grain from Ukrainian ports.

Overall, the Black Sea region remains highly influential in global supply chains. Romania and Ukraine continue to increase planted areas and export competitiveness, while Bulgaria is leveraging its agricultural sector in the energy transition. These regional developments not only affect global grain pricing but also signal shifting roles for Black Sea countries in the evolving balance of trade and sustainability.

Logistics, Storage, and Feed Demand Trends

Transport and storage dynamics played an influential role in shaping grain flows. Mississippi River barge shipments of soybeans rose 10.4% week-over-week, while corn shipments saw a slight decline. Freight rates increased to $13.33 per short ton in St. Louis, reflecting stronger demand for logistics infrastructure despite market volatility.

Indonesia reported a significant drop in April palm oil exports to 1.78 million tons from 2.88 million tons in March. Domestic consumption also declined, and stockpiles rose to 3.05 million tons. This pattern signals sluggish biodiesel usage and potential regional oversupply.

In the U.S. livestock sector, the hog herd rose marginally to 75.14 million head. Increases in pigs per litter and higher slaughter volumes suggest strengthening feed demand. However, how this translates to corn and soybean usage will depend on broader meat demand trends and pending regulatory reforms.

Outlook for the Coming Weeks

Looking ahead, market participants will continue to monitor USDA’s upcoming Acreage Report, expected to confirm high planting figures for corn (95.4 million acres) and soybeans (83.5 million acres). These levels, combined with a mixed weather outlook, leave production risk finely balanced.

Weather will remain a decisive factor. Forecasts suggest July could bring extended hot and dry conditions to much of North America and Europe, placing additional stress on spring crops and potentially limiting yields. Cold risks in Southern Brazil also persist and could influence harvest outcomes for the second corn crop.

As harvest activity intensifies in the Northern Hemisphere and export competition remains fierce, traders will navigate a challenging mix of ample supply, logistical bottlenecks, geopolitical friction, and uneven demand. The global grain market stands at a pivotal point, with volatility likely to continue in the weeks ahead.