Key Policies and Trade Trends

Policy announcements and trade realignments dominated sentiment this week, driving both short-term volatility and long-term structural shifts.

In the United States, energy and biofuel policy remained in focus. The Environmental Protection Agency advanced its proposal to reallocate waived Small Refinery Exemptions (SREs), with options ranging from partial to full reallocation. A full implementation would materially lift demand for corn-based ethanol and soy-based biodiesel, but refiners warned of increased costs, leaving markets braced for prolonged uncertainty. At the same time, the Renewable Fuels Association renewed calls for nationwide E15 adoption after USDA’s WASDE flagged a large corn surplus of 2.1 billion bushels, highlighting the urgency of demand expansion. Weekly ethanol data underscored this balancing act, with output slipping to 1.055 million bpd and inventories easing to 22.6 million barrels.

China made headlines with decisive trade and sustainability shifts. Beijing effectively froze Canadian canola imports by imposing a punitive 75.8% anti-dumping duty, prompting state-owned COFCO to pivot aggressively toward Australian canola, securing up to nine cargoes totaling roughly 540,000 tons for November–January delivery. This underlined China’s capacity to diversify origins but also spotlighted supply risk given Australia’s smaller crop base. In parallel, China approved 98 new GM crop varieties, including two soy and 96 corn strains, marking a strategic move to strengthen domestic feed security. Additionally, Beijing urged its largest hog producers to scale back herds and manage slaughter weights around 120 kg, signaling a policy-driven attempt to stabilize pork markets and indirectly temper feed demand growth.

In Europe, trade flows are being reshaped on multiple fronts. The European Union concluded a long-awaited trade deal with Indonesia, opening the door for palm oil and related agri-products to flow under new deforestation-compliance frameworks. While still pending ratification, the pact could recalibrate EU vegetable oil sourcing and reduce reliance on traditional suppliers. Within the bloc, Coceral upgraded EU+UK grain harvests to 306.8 MMT, with soft wheat hitting a decade high, setting the stage for more competitive exports once logistics normalize.

Brazil consolidated its role as the swing player in both soy and corn markets. National agency CONAB lifted soybean production forecasts to a record 177.7 MMT on expanded acreage while trimming corn output to 138.3 MMT. The split outlook sharpened global competition, reinforcing Brazil’s dominance in oilseeds and biofuels while tightening corn balances. Export group ANEC simultaneously upgraded September shipment projections for soybeans, soymeal, and corn, underscoring Brazil’s immediate influence on global flows.

From the Black Sea region, Russia raised its wheat export duty nearly threefold to 495.9 rubles/ton, while reinstating a corn duty at 398.2 rubles/ton after a five-week pause. These moves reflect Moscow’s dual effort to control domestic inflation and accelerate sluggish early-season exports. At the same time, Russia reported 114 MMT of harvested grain (84 MMT wheat), keeping its total outlook at 135 MMT, while Kazakhstan and Ukraine both flagged steady harvest progress despite weather disruptions. With FOB offers from the region remaining competitive, Black Sea policies continue to steer global pricing and trade flows.

Elsewhere in Asia, Taiwan signed a $1.3 billion letter of intent to import 3.6 MMT of U.S. wheat between 2026–2029, offering long-term demand certainty for U.S. exporters. In Southeast Asia, the Philippines considered extending its temporary rice import ban by 30 days to protect domestic producers, a move that could ripple into broader Asian grain trade, particularly given recent flooding in Pakistan that wiped out an estimated 220,000 hectares of rice.

Finally, sustainability and certification frameworks gained momentum. Brazil’s CJ Selecta announced plans to double its RTRS-certified GMO soy purchases by 2027, while maintaining 100% non-GMO sourcing under ProTerra. RTRS-certified soy output hit 6.8 MMT in 2024, with Brazil accounting for roughly 80%. These signals reflect mounting ESG pressures, especially with the EU’s deforestation regulations set to tighten traceability and reporting obligations for exporters.

Futures and Price Movements

The grain markets spent the week under the influence of heavy policy signals, shifting weather patterns, and evolving global trade flows. In Chicago, futures contracts reflected a tug-of-war between stronger export interest and mounting supply competition.

Wheat futures struggled to hold early gains, with December CBOT contracts settling at $5.24¼/bu by Thursday, down four cents on the day, before ticking slightly firmer on Friday to around $5.25. Kansas City contracts mirrored the weakness, while Minneapolis spring wheat stayed under pressure. Selling was fueled by profit-taking and competitive global offers, though a three-week high in U.S. export sales provided some support. Globally, the International Grains Council (IGC) raised 2025/26 wheat stocks to 270 MMT, while Coceral projected EU+UK soft wheat output at a decade high, reflecting bumper yields in France, Germany, Poland, and Southeast Europe.

Corn futures carried midweek softness into Thursday, with December contracts closing at $4.23¾/bu, three cents lower, but rebounded slightly on Friday to $4.26½. The tone was shaped by U.S. export sales surprises, with bookings reaching 1.23 MMT—led by Mexico, South Korea, and Japan—and a fresh 110,000 MT daily sale to Mexico reinforcing demand. Brazil remained central to the narrative, as CONAB cut its 2025/26 corn crop estimate to 138.3 MMT despite expanded acreage, raising competition risks in Q4 and into 2026. Meanwhile, U.S. river logistics tightened, with Mississippi barge shipments down nearly 28% for both corn and soybeans and freight rates at St. Louis climbing to $24.54/short ton.

Soybeans ended the week weaker, with November contracts at $10.37½/bu on Thursday—down 6¼ cents—before opening Friday near $10.42½, supported by firmer product spreads. U.S. export sales improved week-on-week at 923,018 MT, though volumes continued to lag last year’s pace and China remained absent from the books. Brazil’s record projected crop of 177.7 MMT (+3.6% y/y) underscored bearish fundamentals, as did expanding acreage and steady early planting progress in southern Brazil. Canada’s canola crop was also revised higher, adding further oilseed competition.

Weather and Harvest Dynamics

Weather was a defining theme across hemispheres. In the U.S., conditions diverged sharply. The Midwest and Northern Plains were hit by persistent rains, slowing soybean harvests and corn dry-down while improving soil moisture and river flows. Conversely, the Delta remained parched, with low Mississippi levels constraining barge logistics until expected rains next week. USDA data showed drought coverage rising sharply: corn areas affected increased from 13% to 25% week-over-week, and soybeans from 22% to 36%.

South America also stood out. Brazil began planting soybeans on favorable soil in southern regions, though Mato Grosso awaits consistent wet-season rains, pushing potential planting delays into October. Argentina reported 6.2% of corn planted ahead of a stormy weekend, with wheat conditions rated at 97.1% normal to excellent. Analysts noted that favorable early-season rains could underpin strong yield potential.

Elsewhere, Europe experienced warmth that supported wheat and barley yields, but southeastern corn yields suffered. Russia and Ukraine reported steady harvest progress, with Russia surpassing 114 MMT (84 MMT wheat) and Ukraine 29.8 MMT (62% complete). In Western Australia, GIWA nudged its wheat outlook higher to 11.8 MMT but warned that heat could peel off up to 1 MMT next week.

Black Sea Region Dynamics

The Black Sea continued to shape global grain trade this week, with delayed shipments from Russia and Ukraine opening space for U.S. wheat in Asia. Indonesia secured 500,000 tons, Bangladesh 250,000 tons, and Sri Lanka 100,000 tons, while longer-term deals were signed with Indonesia and Bangladesh for steady annual U.S. wheat purchases. These moves highlight how even short-term Black Sea disruptions can quickly shift global demand patterns.

In oilseeds, sunflower forecasts were revised lower as drought cut Ukraine’s crop to 12.9 MMT and further reductions hit France, Bulgaria, Romania, and Spain. Turkey also saw a minor downgrade, though stronger prospects in Kazakhstan and Argentina partly offset losses. The downgrades reinforced concerns about weather stress in the region, tightening the balance sheet for 2025/26.

Bulgaria stood out for its severe corn losses, with USDA projecting the smallest harvest since 2009 at just 1.5 MMT. Yields collapsed to 2 t/ha and planted area fell nearly 20% year-on-year, with further cuts expected in the coming seasons. While wheat and barley fared better on higher yields, the steep fall in milling quality underlines the volatility facing producers in the region.

Looking ahead, ADM launched a regenerative farming program in Hungary covering sunflower and soybean acreage, with plans to expand into Bulgaria, Romania, Turkey, and Ukraine. The initiative reflects a broader push for sustainability in the Black Sea region, aligning global agribusiness with local producers to boost resilience against climate and policy pressures.

Demand, Consumption, and Vegoils

Vegetable oil markets also reflected mixed signals. Malaysian palm oil futures slipped modestly, while U.S. RIN generation eased, reflecting lower August biofuel blending. China’s futures markets showed pressure on soyoil and palm, narrowing product spreads. India’s palm imports in August surged to their highest in a year at nearly 1 MMT, while soyoil imports dropped 25%, underscoring price-driven substitution.

In Brazil, soybean oil’s contribution to crushing profits reached record parity with soymeal, highlighting biodiesel demand. CJ Selecta, a leading crusher, announced ambitions to double RTRS-certified GMO soy purchases by 2027, aligning with growing ESG-driven demand, while RTRS-certified production reached 6.8 MMT in 2024, 80% of it from Brazil.

Outlook

The week closed with grains reflecting a complex interplay of heavy supply-side signals, emerging trade realignments, and weather risks. Wheat markets absorbed competitive pressure from Europe and the Black Sea but found support in U.S. export sales. Corn futures balanced Brazil’s evolving supply outlook against stronger U.S. demand and logistical challenges. Soybeans remained weighed by South American prospects despite improved U.S. sales.

Looking ahead, market participants will closely monitor U.S. harvest progress under split weather conditions, the start of Brazil’s wet season in Mato Grosso, and the implementation of new policy measures on both biofuels and trade. The balance between surging supplies and shifting demand will continue to define sentiment as the Northern Hemisphere harvest season deepens and the Southern Hemisphere planting accelerates.