Weekly Analysis 04.08.2025 - 08.08.2025

China’s Record Soy Imports and U.S. Export Surge Fuel Optimism Despite Weather Uncertainty

Key Policy and Trade Developments

China’s record July soybean imports, totaling 11.67 million metric tons, dominated the oilseed narrative. These inflows, largely from Brazil, marked the highest ever for the month and reinforced China’s reliance on South American supply amid cautious engagement with U.S. exporters. Analysts expect imports to remain above 10 million tons through September; however, a domestic soymeal surplus and weaker-than-expected feed demand could place downward pressure on prices in the months ahead. The absence of Chinese purchases for U.S. Q4 soybeans continues to be a strategic concern for American exporters, limiting the market’s ability to price in sustained bullishness.

Ukraine’s grain export infrastructure gained a critical boost with the reopening of the Bystre Canal, a move expected to reduce freight costs and improve shipment flows through the Danube corridor. The Ukrainian Farmers’ Union also reported a strong surge in barley exports, with 250,000 tons shipped to China in July and a further 300,000 tons expected by mid-August. However, challenging weather and slowed harvest progress could cap total barley production at 4.5–5 million tons, most of which will be consumed domestically. This raises the possibility of a supply deficit for China and regional buyers later in the year.

Brazil retained its dominant role in the soybean trade, exporting a record 12.3 million tons in July with a total value of $5 billion USD, despite a 7.1% drop in average price per ton. Corn exports from Brazil, on the other hand, fell 32% year-on-year due to delayed second crop harvests and logistical bottlenecks, a shift that could redirect more global demand toward U.S. corn. Importantly, analysts flagged a potential deceleration in soybean area expansion for the 2025/26 season — possibly the slowest in two decades — which could tighten supply in future marketing years.

Argentina strengthened the wheat market’s bullish undertone as the Buenos Aires Grain Exchange reported that wheat planting for the 2025/26 season is complete, with 99% of the crop in normal to excellent condition. Wheat acreage increased by 400,000 hectares from last year, enhancing the country’s export potential. The Argentine government’s move to cut export taxes on soymeal, soy oil, and raw beans also reshaped regional competitiveness. This policy change narrows the gap between raw and processed product exports, with Brazilian crushers poised to capture more market share in Asia and Europe as Argentine processors face a new competitive landscape.

Russia reaffirmed its status as the global wheat powerhouse, with the IKAR consultancy lifting its 2025 wheat crop forecast to 84.5 million tons and export projection to 41.5 million tons. High yields in the central and Volga regions more than offset earlier drought impacts in the south, and spring wheat harvest results have exceeded expectations. The combination of quality and volume solidifies Russia’s pricing power in Black Sea wheat exports, especially in the absence of any new restrictions.

In Europe, France raised its wheat production forecast to 33.07 million tons, a 29% increase over last year and 4% above the five-year average. However, corn prospects are under pressure, with the harvest estimate cut by 5.5% to 13.7 million tons due to early summer heat and escalating water stress. The contrasting fortunes of wheat and corn in France underscore the volatility of climate impacts on European grain production and highlight the potential for shifts in intra-EU trade flows.

Macroeconomic conditions also intersected with grain market sentiment. The UN FAO Food Price Index rose 1.6% in July, with sharp gains in vegetable oil and meat prices offsetting a 0.8% drop in the grains sub-index. Palm oil values strengthened amid robust demand and tightening Black Sea sunflower oil supplies, while meat prices hit record highs due to costly cattle and sheep production. These inflationary pressures could alter consumer demand patterns and influence government stockpiling or import policy in price-sensitive markets.

CBOT Chicago
SRW Wheat month 09.25 12.25 03.26 05.26
USD/mt 189.05 196.58 203.65 208.43
Corn month 09.25 12.25 03.26 05.26
USD/mt 150.68 159.64 166.53 170.47
Soybeans month 08.25 11.25 03.26 05.26
USD/mt 355.22 362.84 375.80 381.03

 

EURONEXT Paris
Wheat month 09.25 12.25 03.26 05.26
EUR/mt 196.50 199.50 207.00 211.25
Corn month 11.25 03.26 06.26 08.26
EUR/mt 191.25 198.25 202.25 207.25
Rapeseed month 11.25 02.26 05.26 08.26
EUR/mt 468.25 475.00 477.25 456.00

 

Price Performance Recap

Wheat futures for September 2025 began the week under mild pressure but gained strong momentum midweek, closing Friday at $5.18¼ per bushel, unchanged from Thursday’s close but up 9¾ cents from midweek levels. The rebound was fueled by robust U.S. export sales, particularly for hard red winter wheat, as well as improved European harvest forecasts. Kansas City and Chicago exchanges posted double-digit increases on Thursday before pausing ahead of the weekend. Despite the week’s gains, wheat prices remain lower for the month and year-to-date, reflecting an underlying bearish tone in long-term supply dynamics.

Corn futures saw a more volatile trajectory. The September 2025 contract opened the week lower but rallied sharply on the back of new crop export sales reaching 3.16 million metric tons, the second-highest total for this week of the marketing year. Closing Thursday at $3.84½ per bushel, up 4¾ cents, the market eased slightly by 1 cent on Friday’s open as traders took profits and weighed forecasts for higher U.S. yields. Positive ethanol data, including production at 1.081 million barrels per day and a 3.9% drawdown in stocks, provided additional support, though looming USDA yield projections tempered enthusiasm.

Soybeans posted a strong recovery late in the week after initial weakness. The September 2025 contract climbed 8½ cents on Thursday to close at $9.74 per bushel before easing 1½ cents in early Friday trade. Weekly export sales offered key support, with 467,842 MT for old crop and a marketing-year high of 545,010 MT for new crop. Brazil’s ANEC projected August soybean exports at 8.15 million metric tons, exceeding last year’s pace, while Chinese customs reported a record 11.67 million metric tons imported in July. Despite these bullish signals, rain forecasts for the U.S. Midwest and China’s continued absence from U.S. Q4 bookings kept gains in check.

Weather Impacts and Agronomic Outlook

Weather developments were a persistent driver of market sentiment throughout the week. In the U.S., the Corn Belt is expected to face warm and dry conditions into early September, raising yield concerns during critical reproductive phases for both corn and soybeans. The Canadian Prairies saw belated rainfall that arrived too late for maturing wheat, while Australia continues to benefit from regular showers supporting wheat and canola growth.

China’s central and northern regions are forecast to receive timely rainfall through the weekend, offering relief after extended heat and dryness. In Europe, France’s water-stressed corn crop is a reminder of the continent’s vulnerability to climate volatility, even as wheat production outlooks improve. Meanwhile, favorable weather across key producing regions in South America is sustaining strong export performance despite logistical constraints.

Black Sea Region Developments

The launch of the Black Sea Wheat (CVB) Financially Settled (Argus) futures contract in early June 2025 has quickly established itself as a noteworthy development for the regional grain trade. In just its first month, approximately 160,000 metric tons of wheat have been traded under the new instrument, which links Romanian and Bulgarian exports—shipped from the ports of Constanța, Varna, and Burgas—directly to global markets. With a high price correlation (0.97) to Novorossiysk wheat, the CVB contract offers a valuable hedging tool for traders and exporters, enabling risk management and forward price fixing for up to 15 months. Its adoption is expected to grow alongside the new harvest season, positioning it as a key benchmark for the Black Sea wheat market.

In Bulgaria, official forecasts suggest a wheat harvest exceeding 7 million tons this year, a potential increase compared to last year’s 6.4 million tons. However, grain producers remain skeptical, citing unfavorable weather and weaker-than-expected yields in certain regions. Prices are a particular concern, with wheat trading nearly 100 leva per ton lower than last year—levels not seen in 15 years—placing financial strain on farmers despite relatively good yields in the southeast. Approximately 80% of the wheat area and over 90% of the barley crop have already been harvested.

Rapeseed markets in the region reflect broader European trends, with November Paris futures falling 2.2% over the week to €475 per ton despite further cuts to EU production forecasts. The European Commission has reduced its harvest outlook to 18.5 million tons, still above last year’s level but below processing needs. In Romania, the rapeseed harvest is projected at 1.8 million tons, significantly higher than in 2024, while Germany’s forecast remains stable at 3.9 million tons. Prolonged rainfall in parts of Europe is delaying harvests, although early yield and oil content reports remain positive.

Demand and Consumption Trends

The U.S. export sales report was a major catalyst for price movements this week. Wheat sales totaled 737,831 metric tons, far exceeding expectations, while corn’s new crop sales hit 3.16 million tons, with Mexico, South Korea, and Guatemala among the top buyers. Soybeans also saw robust demand, with Taiwan, the Netherlands, Egypt, and unidentified destinations booking large orders.

The biofuel sector continued to play an influential role. Palm oil prices held steady around 4,000 ringgit/ton on the back of Indonesia’s biodiesel mandate and favorable weather, while the EU granted Indonesia zero tariffs on 1 million tons of crude palm oil annually. With U.S. soybean oil use for biofuel expected to rise 23%, substitution effects from palm and canola oil markets are likely to reverberate through global oilseed trade.

Outlook for Next Week

The upcoming USDA Crop Production report is set to be the focal point for traders, with yield and production estimates likely to determine short-term price direction. Ongoing trade tensions, particularly between China and the U.S., remain a risk factor for soybean demand, while Brazil’s slower acreage expansion hints at potential tightening in the longer term. Weather patterns in the U.S. Midwest, Canadian Prairies, and Australia will continue to be closely monitored for their impact on yield prospects.

The past week highlighted the interconnected nature of global grain markets, where trade policy shifts, export performance, and climate conditions converge to influence prices and sentiment. With multiple bullish and bearish forces at play, the balance between short-term optimism and long-term caution remains finely poised as the market moves deeper into August.