Policy and trade: Escalating frictions cloud outlook

Trade policy tensions resurfaced as a major theme this week, with multiple regions introducing measures that could reshape global grain and feed flows. China imposed preliminary duties of up to 62.4% on EU pork imports, a move that not only threatens European protein exporters but could also reverberate across feed grain markets if substitution shifts demand for soymeal and corn. At the same time, Beijing extended its anti-dumping probe on Canadian canola until March 2026, having already levied provisional duties of 75.8%. Canada responded by pledging financial support for its canola and metals sectors, while Prime Minister Mark Carney promised high-level engagement to de-escalate the dispute.

Japan emerged as a bright spot, signing an agreement with the United States to expand purchases of U.S. corn, soybeans, bioethanol, and fertilizers to a value of $8 billion per year. This deal provides a reliable demand anchor for U.S. producers at a time when Chinese buying remains subdued.

Elsewhere, the European Union’s sluggish export performance came into focus, with soft wheat exports down 44% year-on-year and corn imports halved since July 1. These weak flows reflect both uncompetitive pricing and incomplete customs data, but the directional trend raises questions about the EU’s export momentum going into 2025/26.

Geopolitics also shaped trade flows in the Black Sea. Russia continued to struggle with wheat exports, shipping only 6.1 MMT in July–August compared with 9.9 MMT last year, despite an abundant harvest. Moscow’s effort to gain access to China’s wheat market remains stalled, limiting its ability to redirect surplus volumes eastward. Ukraine, meanwhile, saw grain exports plunge 43% year-on-year due to logistical constraints, even as improved rainfall lifted corn output prospects to a four-year high of 31.3 MMT.

In the Middle East and Eastern Europe, Israel and Moldova signed a memorandum of understanding on joint wheat cultivation, part of Israel’s broader food-security strategy amid volatile global markets. Meanwhile, Brazil advanced talks with the EU on sanitary recognition for its poultry sector, which could restore access to a lucrative market for Brazilian producers and influence global feed demand.

Taken together, these developments underline a world in which geopolitical frictions, sanitary disputes, and bilateral trade deals are increasingly determining grain market balances. For exporters, the outlook is clouded by protectionist policies in some regions but supported by new partnerships in others, leaving global flows more fragmented and competition more intense.

Wheat: Mixed fundamentals amid global competition

Chicago soft red winter (SRW) wheat futures fluctuated but remained subdued, with December ’25 contracts settling around $5.19/bu by week’s end, down roughly 15 cents compared to last Friday. U.S. FOB competitiveness eroded slightly as French and Russian export offers narrowed the gap, and USDA’s export sales report showed just 313,000 tons booked in the last week of August—one of the lowest weekly tallies of the season. Commitments of Traders (CFTC) data highlighted continued bearish sentiment, with speculators maintaining large net short positions across both Chicago and Kansas City wheat.

In Europe, Germany reported a strong harvest rebound, with winter wheat output up 26% year-on-year to 22.45 MMT and protein levels averaging 12%—a boost for milling quality. Russia, meanwhile, pushed past 100 MMT of total grain harvested and still targets at least 135 MMT for the season, though wheat exports remain sluggish compared to last year. Ukraine’s early harvest reached 28.8 MMT, including 22 MMT of wheat, but total exports are still down 43% year-on-year due to logistical bottlenecks and reduced capacity at southern ports.

Australia further lifted its 2025/26 wheat production outlook to 32.3 MMT after widespread July–August rainfall, with favorable satellite imagery supporting crop vigor in key producing states. That trajectory suggests heightened competition in global export markets through the final quarter of 2025.

Corn: Ethanol resilience and trade deals support outlook

Corn futures held relatively stable, with December ’25 contracts ending the week near $4.18/bu, down just 2¼ cents from last Friday. National cash corn hovered at $3.73–$3.75, while July U.S. Census shipments reached 6.22 MMT—the second-largest July on record. Ethanol remained a steady demand driver, with weekly output holding above 1.07m b/d and stocks edging to 22.56m bbl. Census also flagged record July ethanol exports of 164m gallons, underscoring strong international demand.

The U.S.–Japan trade agreement announced late in the week was a fresh boost, committing Japan to expand purchases of U.S. corn, soybeans, bioethanol, and related products to a value of $8 billion per year, compared with $2.5–4.8 billion in recent years. Outstanding U.S. corn sales for 2025/26 rose to 18.78 MMT by August 21, supported by strong commitments from Mexico, Japan, Colombia, South Korea, Taiwan, and new demand from Vietnam.

Globally, Ukraine’s corn crop is forecast at 31.3 MMT in 2025/26, a four-season high, thanks to timely rains boosting yields in western and northern regions. Exports are projected at 26 MMT. In South America, Brazil’s exports in August jumped to 6.85 MMT, almost triple July volumes, with projections for 6.37 MMT in September. Argentina maintained its 2024/25 production estimate at 49 MMT, with harvest 98.5% complete.

Soybeans: Pressure from weak sales despite strong July trade data

Soybean futures closed weaker, with November ’25 contracts falling 27½ cents on the week to $10.33/bu. USDA reported net reductions in old-crop sales for the second straight week, while new-crop sales reached 818,000 tons—a four-week low. China remained largely absent from the U.S. export lineup, adding to the cautious tone.

Yet Census data painted a more supportive backdrop: U.S. July exports hit 1.75 MMT, a three-year high, while soymeal exports surged to a record 1.39 MMT and soyoil shipments reached 28,500 tons. StoneX trimmed U.S. yield estimates to 53.2 bpa, pegging production at 4.26 bbu, down from earlier forecasts but still large enough to keep global balances comfortable.

Brazil’s soybean outlook was another focal point. Rabobank expects planted area growth of just 1.5% in 2025/26, well below the historical 3.5% pace, though a record 175 MMT harvest remains plausible with trend yields. September exports are projected at 6.75 MMT, well above last year’s 5.16 MMT, alongside a sharp rise in soymeal exports.

Black Sea Region: Contrast Between Strong Wheat and Failed Spring Crops

The situation in Dobruja remains critical for spring crops. Sunflower yields in Northeastern Bulgaria started at extremely low levels—ranging between 80–180 kg/da, with forecasts for average results around 150 kg/da. Corn conditions are even worse, with many areas expected to be declared as failed. For the fourth consecutive year, drought and extreme temperatures have caused catastrophic losses, while the lack of irrigation questions the profitability of the crop. Although wheat recorded a 2% increase in average yields compared to 2024, profits from it are insufficient to offset the losses from corn and sunflower.

In Ukraine, the harvest of sunflower and soybeans is significantly delayed, with only 0.3% of the acreage for each crop harvested by the end of August—far below last year’s levels. The main factors are uneven ripening and prolonged drought. At the same time, the country introduced 10% export duties on soybeans and rapeseed, but with important exemptions for farmers and cooperatives exporting their own production. This measure aims to protect the domestic processing industry but could lead to short-term disruptions in export flows.

Russia continues to report stable grain results, with more than 100 MMT already harvested and the ambition to reach or even exceed 135 MMT for the year. In Turkey, the wheat and barley harvest is nearly complete, with results close to last year’s, but sunflower harvesting is noticeably delayed. This further increases tensions in the regional oilseed balance.

The Black Sea market during the week clearly demonstrated a dual picture—stability in wheat, which showed good yields and relatively firm procurement prices, but a severe crisis for corn and sunflower in Bulgaria and Ukraine. The lack of irrigation and ongoing climate challenges remain a major risk for producers, while new trade policies and customs measures in the region could trigger shifts in export flows and the competitiveness of individual countries.

Weather: Frost risks in the U.S., rains in Europe, dryness in the Black Sea

Weather was a critical driver this week. A series of cold fronts swept across the U.S. Northern Plains and Midwest, raising fears of early frosts that could trim late-season yield potential for corn and soybeans. Forecasts indicated temperatures dipping below 40°F in some northern areas, with risks persisting through early next week.

In Europe, repeated rains aided immature summer crops and prepared soils for winter wheat planting, while Western Europe faces risks of excessive precipitation under a potential La Niña later this year. The Black Sea region, in contrast, stayed largely dry, threatening both late-season crop finishes and upcoming winter wheat sowings. Argentina benefited from recent rains that boosted wheat in good/excellent condition to 98%, though cold snaps and localized flooding posed challenges. Australia saw contrasting conditions, with strong prospects in Western states but yield concerns in drier eastern regions.

Vegetable oils: Palm under fungal threat

The vegetable oil complex drew attention after reports of Ganoderma fungus spreading across Malaysian palm plantations earlier in the crop cycle than usual. Surveys indicated 13.7% of Malaysian palm areas are already affected, raising concerns about long-term yield losses of up to 20% over a 25-year cycle. With biodiesel mandates and replanting delays already constraining supply, palm oil futures gained modestly, reinforcing spreads against soybean oil.

Macro backdrop: FAO index at two-year highs

The FAO global food price index held near a two-year high in August, driven by record meat costs and a rally in vegetable oils. Meat prices hit all-time highs on tighter cattle and sheep supplies, while vegetable oils rose on firmer palm, sunflower, and rapeseed quotations. Grains and dairy eased slightly, but overall, world grain stocks were lifted to a record 898.7 MMT for 2025/26, highlighting the paradox of comfortable aggregate supply amid localized weather risks and policy frictions.