Geopolitical Policies & Global Trade Realignment

A sweeping reshuffle of global trade dynamics took place this week as major grain producers and buyers adjusted their positions in response to shifting alliances, tariff threats, and policy reforms.

The most consequential geopolitical event was the announcement of a finalized EU–U.S. trade agreement, which brings long-awaited clarity to bilateral commerce. The deal sets a 15% baseline tariff on almost all EU exports to the U.S.—a reduction from current levels for key items—and includes zero-for-zero tariffs for some agricultural products, aircraft, semiconductor equipment, and natural resources. While tariffs on European steel and aluminum remain temporarily fixed at 50%, a quota system is in the pipeline. Most notably, the EU pledged $750 billion in strategic purchases—including energy and agricultural commodities—during Donald Trump’s second presidential term, reinforcing U.S. agri-export prospects.

Another key highlight was Bangladesh’s shift toward U.S. wheat imports, securing 220,000 tons in a government-to-government agreement. The deal is part of a broader commitment to import 700,000 tons annually over five years. Bangladesh's move comes in response to President Trump’s threat to impose 35% tariffs on its exports. Once reliant on U.S. food aid, Bangladesh is now transitioning to commercial procurement as a diplomatic lever to avoid punitive trade measures. The development underscores a growing trend among U.S. trade partners to use grain imports as geopolitical currency.

In South America, Argentina made a decisive push to liberalize its grain trade. President Javier Milei—under pressure from farmers—announced a permanent reduction in export tariffs across key commodities. Soybeans now face a 26% tax (down from 33%), soymeal and soy oil dropped to 24.5%, and corn fell to 9.5%. These tax cuts represent a long-awaited market-friendly reform and mark a significant attempt by Argentina to regain export competitiveness, especially against Brazil. Already, exports that had been halted since July 1 resumed, with volumes expected to recover in the coming weeks. The Argentine Rural Society called for complete elimination of export tariffs, which it described as “worse than the plague, floods, or drought”.

Meanwhile, China’s trade position remained more cautious and complex. The country has yet to secure U.S. soybean cargoes for Q4 2025, raising alarm as this period typically marks peak American export season. The delay stems from weak domestic soymeal demand and oversupplied crushing plants. Talks in Stockholm to resolve broader U.S.–China trade tensions are ongoing, but for now, Chinese strategic stockpiling earlier in the year—combined with muted feed demand—is reshaping its short-term import strategy.

A noteworthy turn came from India’s unexpected pivot to China for soyoil imports. In a rare move, Indian buyers booked 150,000 metric tons of soyoil from Chinese crushers, leveraging a $15–$20/ton discount and faster shipping times compared to South America. This unusual trade flow—China is typically a net importer—exemplifies how oversupply and freight economics are disrupting traditional trade routes. It also signals China's desperation to offload excess stocks amid surging domestic processing and shrinking feed demand.

In Southeast Asia, Malaysia and Indonesia both negotiated key palm oil terms with the U.S. and EU. Malaysia is pursuing tariff exemptions for palm oil, rubber, and cocoa under bilateral discussions, and agreed to implement zero tariffs on 61% of U.S. goods as part of its broader trade pact. At the same time, Indonesia raised its August reference price for crude palm oil to $910.91/ton, increasing its export tax and signaling tighter margins for downstream buyers.

In North America, a fresh trade dispute emerged as President Trump raised tariffs on Canadian goods to 35%, escalating economic tensions between the two neighbors. Although Canada is not a primary supplier of grains to the U.S., this move injects more uncertainty into North American trade flows, especially for processed agri-food goods and oilseeds.

Collectively, these developments reflect a volatile and highly politicized global grain trade environment, where tariffs, quotas, and bilateral diplomacy increasingly drive the direction of commodity flows. Exporters such as Argentina and the U.S. are leveraging trade policy for geopolitical influence, while importers like Bangladesh and India are using purchase agreements as strategic buffers. As the global market recalibrates around these shifts, grain flows are being redirected not just by price—but by politics.

Futures Market Recap and Fundamental Prices

Wheat (CBOT September 2025)

Wheat futures were under intense selling pressure, falling 17¾ cents for the week. Despite that, real-world pricing remained buoyed by the Black Sea export bottleneck, which has effectively removed millions of tons from the short-term market. Minneapolis spring wheat saw a 9½-cent drop, while Kansas City HRW eased by only 2¾ cents, reflecting a regional divergence in quality expectations.

Corn (CBOT September 2025)

Corn futures declined 3¾ cents over the week, cushioned by high U.S. crop condition ratings and robust production forecasts. Analysts project a 400-million-ton harvest—on par with USDA and Reuters estimates—and most corn is now past the silking stage. While isolated stress in the Delta and Plains remains a concern, central Corn Belt states have near-record vegetation indices.

Soybeans (CBOT September 2025)

Soybeans were the week’s laggards, plunging 32 cents amid export concerns and growing global supply. Brazil’s July soybean exports were seen at 12.05 million tons, down slightly from earlier forecasts. Meanwhile, U.S. soybean inspections showed minimal volume growth. With China absent from Q4 buying and processors reducing U.S. crush rates, the soybean complex is increasingly pressured by oversupply.

Soymeal futures dropped $5 for the week, and soyoil prices slid by $1.50. A 0.7% drop in U.S. soyoil stockpiles offered slight support, but processing capacity continues to outpace demand. The National Oilseed Processors Association noted a slowdown in run rates due to seasonal maintenance and weak crush margins.

Regional Weather Outlook and Crop Conditions

Weather was a double-edged sword throughout the week, supporting crop health in some areas while threatening harvests in others.

Across the U.S. Corn Belt and Plains, scattered rains and cooler temperatures were largely beneficial. In the Northern Plains, repeated storm systems increased soil moisture, a boost for corn and soybeans, though maturity-stage wheat suffered from excess rain. The Central and Southern Plains also received waves of showers, coupled with falling temperatures, stabilizing moisture levels and improving yield potential for soybeans and late-stage corn.

In the Midwest, severe storms—including a potential derecho in Iowa and Minnesota—caused isolated damage early in the week. Nevertheless, a significant cooling trend and consistent rainfall offset potential stress, leaving crop ratings mostly intact. The USDA’s latest Crop Progress report confirmed corn at 73% and soybeans at 70% good-to-excellent—both above last year’s levels and five-year averages.

Further south in the Mississippi Delta, high temperatures persisted, though a late-week cold front brought scattered showers and moderated heat stress. In Canada’s Prairies, beneficial rains arrived too late for drought-stricken northern fields, and mature southern crops are unlikely to benefit from the weekend system.

Europe experienced persistent rainfall across central and eastern regions, improving moisture profiles for corn but slowing the wheat harvest and risking grain quality. Conditions were especially dry in Spain, where crops remain stressed. Meanwhile, Black Sea nations endured heat and dryness, beneficial for maturing wheat but detrimental for corn. Ukraine’s locust infestations—exacerbated by war-related disruptions—added further threats, particularly to sunflowers.

Export Dynamics and Global Supply Shifts

The most impactful supply-side development this week was the synchronized slowdown in wheat exports from the three largest global suppliers—Russia, Ukraine, and the European Union.

Russia’s July wheat exports fell an estimated 30% year-on-year due to harvesting delays from rains in the Rostov and Krasnodar regions. Ukraine, now facing depleted reserves and lower yields, is exporting at just a third of last year’s pace. The European Union, meanwhile, recorded a 64% year-on-year decline in soft wheat exports for the July 1–27 period. Together, these regions comprise nearly half of global wheat trade, and their shortfalls have lifted Black Sea spot prices by 8% and stabilized Paris futures, even as Chicago SRW futures fell sharply.

China continues to reshape soybean and soymeal trade patterns. Record soybean imports in May and June led to excess soymeal inventories, suppressing demand from feed producers. Soymeal prices in northern China dropped 6.5% year-on-year, and futures weakened for a fourth straight session. Chinese crushers are reportedly reducing run rates or suspending operations amid poor margins.

At the same time, China ramped up soymeal imports from Argentina, taking advantage of favorable tax cuts and competitive prices. In a notable twist, India—traditionally a buyer from Argentina and Brazil—purchased 150,000 metric tons of soyoil from China for Q4 shipment, drawn by lower costs and shorter delivery times. This marks a rare reversal in flow direction, signaling China's efforts to offload oversupply.

Malaysian and Indonesian palm oil exports offered additional complexity. Malaysia’s first-half exports fell 7.4%, but value rose by 9.3% year-on-year. India’s recent import duty hikes have compressed palm oil’s price advantage versus soyoil and sunflower oil, reducing its share of Indian vegetable oil imports from 59% to 46%. However, Indonesia set a higher CPO reference price for August, raising export taxes, while negotiating selective tariff exemptions under CEPA with the EU and U.S.

Mounting Contrasts and Fragile Stability

The global grain market enters August with a complex and fragile equilibrium. While bullish support stems from shrinking wheat exports and favorable U.S. crop development, bearish sentiment dominates soybeans and oilseeds due to global surpluses and trade hesitations from top buyers.

Looking ahead, key indicators to monitor include the USDA’s August 12 Crop Production report, Chinese Q4 soybean purchasing decisions, and whether Russia’s wheat exports normalize. For now, the wheat market has temporarily decoupled from bearish futures pricing due to real-world supply tightness, while corn and soybean traders face an uphill battle against strong yield prospects and slack demand.

If temperatures spike in mid-August—as some forecasts warn—crop conditions could shift rapidly. Until then, a combination of weather, geopolitics, and freight economics will continue to rewrite the rules of engagement in the global grain arena.