Policy Shifts and Trade Impacts

This week brought several key developments on the policy and trade front that are likely to shape grain market fundamentals over the coming months. Some were symbolic but strategically important, while others had immediate and quantifiable consequences for global trade flows, market confidence, and future supply chains.

One headline-grabbing announcement came from former U.S. President Donald Trump, who revealed that Coca-Cola will be transitioning away from high-fructose corn syrup in its U.S. products in favor of cane sugar. While the immediate volumes affected are relatively small, the symbolic shift has triggered conversations around long-term changes in the sweetener landscape. Should other manufacturers follow suit, this could reorient a portion of U.S. corn demand and lead to ripple effects in ethanol and biofuel-linked corn allocations.

Meanwhile, Indonesia accelerated its push toward energy independence and sustainability by considering a transition from its current biodiesel blending mandate to a B50 standard. This would raise domestic palm oil usage by an estimated 3 million tons and significantly curb available export volumes. With the U.S. preparing new tariffs on palm oil imports, Indonesia’s move could serve both economic and geopolitical objectives. For the grain markets, particularly soybean oil and rapeseed oil, this shift adds upward pressure as buyers seek alternative vegetable oils to meet demand.

In France, the government’s export body FranceAgriMer delivered bullish news for the wheat market. It projected a 38% increase in total wheat exports in 2025, reaching 14.32 million tons, with exports outside the EU set to more than double to 7.5 million tons. This strengthens France's role as a key supplier to North African and Asian markets, especially as concerns mount over quality and yields from other origins like Canada and Ukraine. France’s rising competitiveness also puts pressure on Black Sea exporters.

On the Eastern front, SovEcon revised its forecast for Russian wheat production upward to 83.6 million tons, citing improved yields in the central regions. However, this bullish outlook was tempered by continued drought stress in southern Russia. The same report left corn projections unchanged at 14.3 million tons but increased barley estimates to 18 million tons. While Russia continues to play a dominant role in global wheat flows, recent weather and logistical issues (including lower river transport capacity) remain wildcards for near-term export reliability.

A potentially game-changing development emerged from Australia and China, where the two countries are moving closer to a breakthrough in canola trade relations. After years of suspended trade, China has agreed to accept five test shipments totaling up to 250,000 tons of Australian canola. If successful, this could realign rapeseed oil markets and loosen the strain caused by the frosty Canada-China trade relationship. With rapeseed prices already elevated and EU domestic production insufficient, this opening could inject much-needed liquidity into the global vegetable oil complex.

The International Grains Council (IGC) lowered its global corn ending stocks forecast for 2025/26 from 282 to 278 million tons, citing increased global consumption. This marked shift in the balance sheet signals a tightening market despite strong U.S. export data. The revised figures bring renewed attention to supply chain fragility and emphasize how even small changes in demand or weather can tip the scale.

Other localized but notable updates included Mexico and Venezuela appearing as the largest buyers of U.S. wheat in the latest USDA export report. Although not policy-driven, this shift in buyer profile suggests an emerging reorientation in global demand, especially as the U.S. dollar weakens, making American exports more attractive in Latin American markets.

Taken together, these trade and policy developments underscore an increasingly complex grain market structure. As geopolitical alliances shift, climate policies evolve, and protectionist measures intensify, exporters and importers alike are adapting quickly to avoid being caught unprepared in the next wave of volatility.

Futures Performance and Weekly Price Dynamics

The September 2025 wheat contract in Chicago started the week near $5.44 per bushel and experienced fluctuations driven by a mix of global supply signals and speculative movements. On Thursday, wheat posted mild gains, closing at $5.42¾, supported by easing concerns over French availability and increasing tightness in Black Sea supply. However, by Friday morning, the contract opened lower at $5.33½, despite a 9½ cent intraday rise. The softness stemmed from persistent pressure tied to substantial harvests across the Northern Hemisphere and limited U.S. export activity, which saw only 494,400 tons sold last week, mainly to Mexico and Venezuela.

Corn posted a notably bullish trajectory. The September contract opened Friday’s session at $4.02 per bushel after closing Thursday at $4.07¾, marking a 2½ cent daily gain. The upward momentum was fueled by USDA’s weekly report that showed 594,000 tons of old crop sales, well above expectations. Ethanol data also supported the climb, with daily production holding steady at 1.087 million barrels and declining stockpiles. Brazil’s outlook improved as well, with its corn production revised upward to 131.2 million tons due to favorable weather in Safrinha regions. Still, U.S. old crop sales were reported at only 97,600 tons, the lowest of the marketing year. Weather concerns in the Midwest, with continued rainfall and expected heatwaves toward the end of July, added further uncertainty to harvest projections.

Soybeans experienced a surge in prices throughout the week, led by tightening global stocks and robust demand, particularly from China. On Thursday, the front-month contract jumped 19¼ cents to close at $10.32¾. By Friday, it opened slightly lower but still strong at $10.21½. The USDA confirmed a private sale of 120,000 MT for 2025/26 delivery, while June's crush figures set a new record at 185.7 million bushels. Soymeal and soyoil markets followed suit, climbing $2.20/ton and gaining 20–24 points respectively. Crucially, Chinese soybean imports for July were estimated to reach 10.5 million tons, confirming continued strength in global demand.

Black Sea Region Weekly Recap

The Black Sea grain market experienced sharp volatility this week, with tightening wheat supplies and worsening weather conditions at the forefront. Ukrainian feed wheat offers vanished as harvest results revealed higher-than-expected protein levels, triggering a supply squeeze and driving prices up by at least $2 to $210/t FOB. Domestic CPT prices aligned with export values, and many traders now anticipate increased blending of wheat grades due to limited low-quality volumes. Similar patterns are emerging in Bulgaria and Romania, where good protein content is paired with concerns over feed wheat availability.

Bulgaria’s corn outlook deteriorated drastically, with northern regions like Ruse reporting near-total crop failure due to persistent drought and extreme heat. Farmers face financial stress as corn ears remain underdeveloped and sunflower yields decline sharply. While some consider shifting to alternative crops like milk thistle, investment barriers and inadequate irrigation infrastructure—deemed outdated and underfunded—pose major challenges to adaptation.

On the policy front, five eastern EU states, including Bulgaria and Romania, expressed strong opposition to the renewal of Ukraine’s trade preferences under the DCFTA. Their concern lies in the destabilizing effect of Ukrainian grain imports on local markets, adding further uncertainty to regional grain flows and EU policy direction.

Despite these challenges, the region remains a key supplier. Algeria’s latest tender for over 1 million tons of wheat was dominated by Black Sea origins, confirming the region’s export competitiveness despite internal turmoil and geopolitical pressure.

Weather as a Market Driver

Weather was a critical force shaping market sentiment throughout the week, with contrasting scenarios across key producers. China expects an excellent autumn grain harvest, which accounts for approximately 75% of its annual production. The Ministry of Agriculture noted that, despite some localized droughts, overall agrometeorological conditions were positive and supported by modern agricultural techniques.

In the United States, drought conditions continued to recede across the Corn Belt. USDA data showed that drought-affected corn areas dropped to 9%, while soybean zones fell to 7%, indicating a trend toward more favorable growing conditions. The Midwest saw consistent rainfall, although market watchers remained alert to upcoming July heatwaves that could pose new risks.

Europe faced severe weather volatility. In Germany, despite expectations for a 7% larger grain harvest compared to 2024, prolonged heatwaves caused irreversible damage to some cornfields. The German farmers’ union also reported delays in harvest progress due to erratic rains. Similarly, France accelerated its wheat harvest, reaching 71% by July 14, a significant increase compared to the same period last year. However, France’s corn conditions deteriorated under a combination of intense heat and increasingly dry soils.

Canada’s situation was marked by stark regional contrasts. Western provinces suffered from drought, severely affecting durum wheat and lentils. In contrast, northern and eastern regions saw better-than-expected crop development thanks to cooler temperatures and ample moisture, particularly for spring wheat and canola.

Ukraine and parts of central Russia were forecast to receive heavy rainfall, raising concerns about late-season grain quality. Meanwhile, Bulgaria continued to grapple with a worsening drought crisis, affecting both corn and wheat yields and reinforcing Eastern Europe's role as a climate-vulnerable supplier.

Logistics and Export Infrastructure

Logistics remained a background concern that flared into focus this week, particularly in the United States. Grain shipments along the Mississippi River dropped significantly to 554,000 tons for the week, down from 781,000 tons the week prior. In tandem, barge rates in St. Louis spiked by $2.71 per ton. These transportation disruptions add another layer of risk to an already tense supply chain environment and could impact the ability of exporters to meet commitments efficiently.

On the trade diplomacy front, Australia and China made progress toward re-establishing canola trade ties after a prolonged suspension. Five test shipments totaling up to 250,000 tons are planned. This potential reopening would recalibrate rapeseed trade flows in the Asia-Pacific region and could relieve pressure currently felt due to strained Canada–China relations.

Conclusion and Outlook

The global grain market wrapped up the week in a state of heightened alert. Prices responded dynamically to a web of interlinked factors: strong U.S. corn exports and ethanol stability, bullish soybean crush data, fluctuating wheat forecasts in the Black Sea and Europe, and ongoing weather risks. Policies like Indonesia’s biodiesel expansion and Coca-Cola’s shift in sweeteners have started to echo into futures pricing models, signaling potential structural demand shifts on the horizon.

As the final days of July approach, market participants will closely monitor updated crop condition reports, regional trade agreements, and shipping indicators. The market remains highly reactive, with thin margins for miscalculation. Traders, producers, and policymakers alike must stay agile in the face of increasingly fragmented and climate-sensitive global grain flows.