Policy and Trade Developments

Geopolitical negotiations were a central theme, with China dispatching Vice Commerce Minister Li Chenggang to Washington to meet U.S. officials, following President Donald Trump’s extension of a tariff truce. The visit, while not part of formal negotiations, signaled tentative progress in trade relations. China also secured exemptions on palm oil, cocoa, and rubber tariffs with the U.S., underscoring how commodity flows are increasingly tied to geopolitical leverage.

Meanwhile, the U.S.–China trade rift still cast a long shadow, as Beijing continued to diversify soybean imports toward Brazil, Argentina, and Uruguay. Reports indicated China could book up to 10 million tons of South American soybeans in 2025/26, leaving U.S. exporters sidelined during a crucial seasonal window. France, too, faced competitive pressure, as it sought to place up to 9.5 million tons of wheat outside the EU but encountered setbacks due to lower protein levels undermining milling quality.

Egypt announced a higher wheat procurement price for the 2026 season, lifting rates to 2,250–2,350 pounds per ardab in an attempt to secure domestic supply amid volatile international prices. This move reflects growing concerns among import-dependent nations as Russian exports strengthen their dominance in North African markets.

Price Movements and Futures Trends

The grain markets closed the week with stronger trade on Friday, as futures responded to shifting international supply signals and pre-holiday positioning. Chicago wheat futures (September 2025) settled at $5.18 per bushel, up 7 ¾ cents on the day and nearly erasing earlier losses in the week. Kansas City hard red winter wheat contracts added 4 to 6 cents, while Minneapolis spring wheat rose 2 to 4 cents. The Commitment of Traders report showed speculative funds cutting 16,545 contracts from their net short in Chicago wheat, suggesting a partial retreat from bearish bets. Despite ample Russian supply forecasts and ongoing French protein quality concerns, fresh U.S. export sales and fund short-covering lent support into the weekend.

Corn futures rallied sharply into the close of the week, with September 2025 contracts finishing at $3.98 per bushel, up 12 ½ cents on Friday. This marked a notable rebound after midweek pressure from weaker ethanol output and stocks, and left December corn 8 ¼ cents higher on the week. Strong export demand remained a key pillar, as old crop sales reached 70.475 million tons (98% of USDA’s forecast), while new crop commitments hit 18.775 million tons—the second largest for this time of year on record. Speculators also trimmed their large net short position by nearly 34,000 contracts, adding fuel to the rally.

Soybeans posted firmer trade on Friday as well, with September 2025 futures closing at $10.33 ¼ per bushel, up 5 to 8 ½ cents on the day. Soymeal ended mixed, with September down $2.70, while soyoil slipped another 25 to 33 points, capping a softer week for oilseed byproducts. Despite weaker old crop commitments of 50.869 million tons—100% of USDA’s forecast but lagging average pace—new crop soybean sales surged earlier in the week, hitting a marketing-year high of 1.37 million tons. Still, Chinese buying has remained muted, and Brazil continues to dominate global soybean trade flows, leaving the U.S. market reliant on seasonal demand windows and speculative fund positioning, which CFTC data showed turning more net long into the weekend.

Weather and Crop Conditions

Weather remained the defining driver of crop sentiment globally. In the U.S., cooler and drier conditions persisted across the Corn Belt, raising concerns about late-season development for corn and soybeans. Disease risks—including tar spot, southern rust, and northern blight in corn, as well as sudden death syndrome in soybeans—remained elevated, potentially trimming yields despite record crop projections.

South America showed divergent trends. Brazil benefited from timely showers ahead of spring planting, but its Pampas neighbor Argentina grappled with excessive rainfall in Cordoba and the Pampas, with forecasts calling for up to 100 mm of rain. This exacerbated flood and disease risks in wheat fields, on top of earlier frost damage that had already dented confidence in yield potential.

In Europe, the EU’s MARS unit cut corn yield forecasts in southeastern regions such as Romania, Bulgaria, Greece, and southern Ukraine, while northern areas including France, Germany, and Poland enjoyed favorable rains. In the Black Sea, prolonged drought across eastern Ukraine and southwestern Russia raised concerns for winter rapeseed sowing, even as it supported the final stages of wheat and barley harvests.

Australia entered the spotlight with forecasts lifting wheat output to as high as 35 million tons, supported by July–August rains. This positions Australia to reassert itself as a major wheat supplier, especially as carryover stocks from last year add to exportable surpluses.

Global Production Outlooks

Russia dominated headlines, with Argus and IKAR both raising 2025/26 wheat harvest estimates to 86.1 million tons, marking the third-largest crop on record. Exports are now forecast above 43 million tons, reinforcing Russia’s unrivaled grip on global wheat trade. Ukraine’s farmers’ union pegged its wheat harvest at 21.9 million tons, down from last year’s 22.7 million, while corn output is expected at 28–29 million tons.

In North America, Statistics Canada projected wheat production at 35.55 million tons, a slight increase from last year, alongside a 3.6% rise in canola output to 19.94 million tons. Corn production in Canada was estimated at 15.55 million tons, 1.5% higher than 2024. Across the Atlantic, France’s wheat rebound reached 33.4 million tons, but weak protein levels meant just 69% of samples tested above 11%, far below the five-year average of 83%.

Brazilian forecasts added weight to global supply, with corn output revised upward to 137.4 million tons after acreage adjustments and soybeans pegged at 176.5 million tons. Yet, farm credit strains, record loan defaults, and tightening fertilizer purchases signaled structural risks that could hinder long-term productivity.

South Africa’s Crop Estimates Committee raised its corn forecast to 15.8 million tons, a 23% annual increase, further bolstering global feed grain supplies.

Black Sea Region Grain Market Developments

The grain complex in the Black Sea remained under pressure this week, as abundant feed grain supplies weighed on values. Ukrainian wheat prices slipped further, reflecting heightened supply pressure, while barley held firmer thanks to consistent demand for so-called “Chinese quality” shipments. Corn showed more resilience, with Ukrainian and regional markets staying seasonally quiet but relatively stable, resisting the downward pull from ample feed availability.

In oilseeds, sunflower markets continued to face headwinds. Harvesting has begun across Ukraine and neighboring Danube countries, but early yields have disappointed, leading crushers to warn of a difficult season ahead. Weak prices in Serbia and across the basin underscored the bearish tone. However, expectations of reduced sunflower seed output may lend some deferred support to sunflower oil later in the marketing year, as buyers anticipate tighter supplies.

Rapeseed and related oilseeds provided a more mixed picture. Ukraine’s rapeseed harvest exceeded 3 million metric tons, easing immediate supply concerns, while Polish crush activity slowed. Russia, meanwhile, consolidated its dominance in vegetable oils, strengthening its position as the leading exporter of rapeseed oil to China and expanding shipments of flaxseed and sunflower oil. Moscow’s target of 5.5–5.6 million metric tons of sunflower oil exports in 2025/26 further cements its growing role in global flows, particularly toward Asia.

Weather conditions added another layer of uncertainty. Southern and eastern Ukraine experienced unfavorable conditions, raising risks for late-season crops and complicating early winter grain sowing. While the soybean market remains relatively steady, both planting and harvesting activities are being closely watched amid shifting weather patterns. Overall, market sentiment in the region is caught between heavy grain surpluses suppressing prices and tighter oilseed prospects, with sunflower oil demand and Ukraine’s winter sowing campaign likely to set the tone for the months ahead.

Logistics and Protein Markets

Logistical constraints continued to ripple through U.S. export flows. Barge shipments on the Mississippi fell sharply to 485,000 tons in the week ending August 23, down from 667,000 tons previously. Soybean volumes slid 27%, while corn shipments fell 29%. Freight rates in St. Louis rose to $18.63 per short ton, underscoring the persistent strain in U.S. grain logistics despite solid export demand.

Protein markets also shaped feed demand. U.S. poultry slaughter rose 1.6% year-on-year in July to 6.1 billion pounds, while Brazil’s poultry exports remained constrained by avian flu restrictions. These dynamics highlight the close link between livestock sector shifts and feed grain consumption, reinforcing volatility in demand projections.

Weekly Outlook

The past week showcased the fine balance between record harvest expectations and structural vulnerabilities. Russia’s expanding output and France’s protein struggles underscored competitive trade tensions, while China’s soybean diversification strategy threatens U.S. export opportunities during peak season. Weather-driven risks in Argentina and disease threats in the U.S. Midwest serve as reminders that supply forecasts remain fragile.

As the grain market enters September, traders will closely monitor updated USDA and Statistics Canada data, weather patterns in South America and the Black Sea, and any breakthrough in U.S.–China trade negotiations. With logistical strains and protein market shifts continuing to reverberate, volatility remains the defining feature of the global grain market.