Policy Shifts and Trade Flows

Policy and trade decisions played a decisive role in shaping global grain market sentiment this week, amplifying volatility beyond the influence of weather and harvest data.

China remained at the epicenter of oilseed trade disruptions. The government’s strict tariff regime on Canadian canola continued to reverberate, with duties as high as 100% on oil and meal and nearly 76% on canola seed effectively shutting out Canadian exporters. As a result, hundreds of thousands of tons of canola meal remained stranded at Chinese ports, forcing steeply discounted rerouting to alternative markets such as Southeast Asia. These distortions have fueled heightened volatility in China’s domestic rapeseed meal and oil futures, while also reshaping regional procurement strategies for feed and crush industries.

In parallel, China’s allocation of 1.1 billion yuan in agricultural disaster relief funding underscored official concern about autumn grain output amid recurring heat waves on the North China Plain. This intervention highlighted Beijing’s dual strategy of stabilizing domestic supplies while diversifying import sources, particularly from South America, further shifting trade flows away from traditional partners.

Russia’s export policies added another layer of uncertainty. July’s seaborne wheat exports plunged 40% year-on-year, pressured both by lower harvest expectations and restrictive export quotas designed to control domestic food prices. These restrictions opened greater opportunities for competitors such as the EU and Australia, both of which reported stronger market penetration into Asia and North Africa during the period. Russia’s constrained role in global trade continues to distort pricing dynamics, especially in the Black Sea corridor, where Ukrainian exports remain limited by drought-reduced output and logistical challenges.

The European Union also saw adjustments in trade competitiveness. French wheat exports benefited from strong demand in Algeria and North Africa, helped by favorable quality assessments and lower freight costs compared to Black Sea origins. Germany’s expected 10% rise in wheat production likewise positioned it as a key regional exporter heading into autumn, even as currency fluctuations and energy costs remain factors to watch for competitiveness.

India’s trade posture signaled a potential pivot. With monsoon rains replenishing reservoirs and boosting prospects for winter-sown crops, officials hinted that restrictions on wheat exports may be eased in the coming months should production prove as strong as anticipated. At the same time, improved rapeseed harvest prospects could reduce India’s reliance on imported edible oils, reshaping global demand flows for palm oil, sunflower oil, and canola.

In North America, U.S. weekly export sales data reflected a quieter demand picture. Corn commitments fell sharply from the previous week, wheat eased slightly, and soybeans declined modestly but still held at strong overall levels. Mexico remained the largest buyer of U.S. corn, while South Korea led wheat purchases. These figures suggest stable demand from core partners but heightened competition in broader global markets.

Finally, logistical and infrastructure disparities within the Black Sea region highlighted structural trade flow imbalances. Ukrainian exporters, constrained by drought-reduced availability, increasingly turned to Romania and Moldova as re-export hubs. Meanwhile, Bulgaria’s successful wheat harvest faced competitiveness challenges due to weaker port infrastructure and higher shipping costs in Varna and Burgas compared to the Romanian hub at Constanța. These bottlenecks further underscored how infrastructure and policy decisions jointly influence market access and price competitiveness in the region.

Taken together, these developments illustrate how policy shifts — from tariffs and export restrictions to state interventions and infrastructure disparities — are as pivotal as harvest outcomes in shaping global trade flows. The week’s headlines underscored a grain market environment where politics, logistics, and trade rival weather as primary drivers of volatility.

Futures Market Performance and Price Trends

Wheat

Wheat markets remained under pressure for most of the week, with short-covering rallies on Friday unable to offset earlier losses. The September 2025 CBOT wheat contract settled at $5.06½ per bushel, up 3 cents on the final day of trade but still closing 8 cents lower across the week. Kansas City HRW wheat added 2 to 3 cents on Friday, while Minneapolis spring wheat slipped by a similar margin. A key driver of bearish sentiment came from speculative positioning: Commitment of Traders (COT) data showed managed funds expanding net shorts in Chicago wheat to nearly 90,000 contracts, underlining sustained skepticism toward price recovery.
Despite the pressure, export sales data offered a silver lining. U.S. cumulative wheat sales for 2025/26 reached 11.03 million metric tons — the strongest volume for this stage of the season since 2013/14 and already 46% of USDA’s annual projection. This export resilience, however, has yet to counteract global oversupply signals, particularly as Australian output projections continue to climb.

Corn

Corn futures endured a rollercoaster week, initially pressured by USDA’s higher supply outlook before staging a Friday rebound. The CBOT September 2025 contract closed at $3.83¾ per bushel, up 8¾ cents on the day and leaving the week barely positive with a one-penny gain. The turnaround highlighted the tug-of-war between bearish fundamentals and short-term technical corrections.
Export dynamics played a mixed role. Old crop U.S. export commitments climbed to 70.53 million metric tons, nearly 98% of USDA’s target, while new crop sales stood at 13.82 million metric tons, the second-largest on record for mid-August. Even so, speculative funds maintained net short positions exceeding 176,000 contracts, reflecting continued bearish conviction. Weather remained a crucial factor, with limited precipitation forecast across much of the Corn Belt, though localized rains in the Dakotas, Minnesota, Iowa, and Wisconsin offered some relief for late-planted crops.

Soybeans

Soybeans emerged as the clear outperformer. The September 2025 contract surged to $10.22¼ per bushel, gaining nearly 15 cents on Friday and more than 54 cents across the week. The rally was driven by bullish demand signals and strikingly strong domestic processing figures.
The National Oilseed Processors Association (NOPA) reported a record July soybean crush of 195.7 million bushels, the highest monthly volume since January and well above expectations. This record crush highlighted robust domestic demand, particularly for soybean oil, where stocks rose to 1.378 billion pounds — slightly higher than June but 14.7% lower year-on-year, reflecting strong utilization. Export commitments also provided support, with total U.S. soybean sales at 51.1 million metric tons, broadly aligned with USDA forecasts despite weaker-than-expected Chinese buying. Soybeans thus balanced local strength with global demand concerns, resulting in a bullish close.

Black Sea Grain Market Developments

The Black Sea region remained a focal point for grain market dynamics this week, as contrasting harvest outcomes and ongoing weather challenges shaped both supply potential and trade flows. Bulgaria reported a particularly strong wheat harvest, with output reaching around 7.1 million tons of high-quality grain under favorable climatic conditions. Despite the excellent yields, Bulgarian farmers voiced concerns over low farmgate prices caused by oversupply, while exporters pointed to the competitive disadvantage of Bulgarian ports. Facilities in Varna and Burgas face higher operational costs and lower efficiency compared to Romania’s Constanța, limiting Bulgaria’s competitiveness in international trade. Traders stressed the need for infrastructure upgrades, warning that without such improvements, the sector risks falling behind its regional peers.

The sunflower market in Bulgaria delivered a more mixed picture. Official projections anticipate a record harvest of nearly 2 million tons due to expanded acreage and favorable weather, while some farmers highlighted severe losses caused by drought and extreme heat during critical growth stages. This divergence between official forecasts and field-level reports has fueled market uncertainty, with sunflower oil prices already rising in the domestic market. Analysts noted that Bulgarian processors have demonstrated greater flexibility than producers, adapting to changing market realities by importing alternative oilseeds such as Canadian canola. This adaptability contrasts with farmers’ reliance on subsidies and protectionist measures, which could hinder long-term competitiveness if not addressed.

Elsewhere in the region, Ukraine continues to grapple with drought conditions, particularly in the south and east, where corn and sunflower yield potential has been sharply reduced. The lack of rainfall is also delaying winter rapeseed sowing, raising concerns about the next production cycle. Similarly, southwestern Russia faces heat and dryness threatening late crops, though central and eastern areas reported better conditions. Limited Ukrainian supply has already prompted traders like Region Grain Company AG to expand sourcing into Romania and Moldova, underscoring shifting trade patterns and the growing role of neighboring countries in filling regional supply gaps. With the Black Sea corridor remaining a key determinant of global grain trade flows, the region’s weather risks and logistical bottlenecks will continue to play a critical role in price movements and export competitiveness in the weeks ahead.

Global Supply Developments and Harvest Outlooks

A major factor weighing on grain markets was the revision of Australian output expectations. The Grain Industry Association of Western Australia (GIWA) lifted wheat production estimates to 11.5 million tons for 2025/26, supported by favorable rainfall across key growing regions. Nationally, Australia’s wheat harvest is now projected at close to 34 million tons, rivaling last year’s record and ensuring robust global supply. The bullish harvest outlook extended to barley and canola, further reinforcing Australia’s role in international grain flows.
In Europe, harvest progress remained strong, with France reporting high-quality wheat and barley crops, while Germany forecast wheat production to rise by 10% year-on-year due to expanded planting and favorable weather. These developments collectively reinforced the theme of abundant supply, pushing wheat futures to five-year lows earlier in the week before recovering marginally.

Weather Impacts Across Growing Regions

Weather patterns once again proved decisive in shaping sentiment. In the U.S., rains across the Northern Plains and Midwest supported corn and soybean development, though harvest quality concerns lingered for wheat due to localized flooding. The Delta and Lower Mississippi regions remained patchy, with persistent dryness threatening late-season grain and cotton filling.
In Canada, heavy rainfall benefited late-season crops but simultaneously delayed harvesting progress for earlier-seeded varieties, creating uncertainty in the timing of exports.
Across Europe, hot and dry conditions stressed corn crops in central and southern regions, though they aided the final stages of wheat harvest in northern areas. The Black Sea region faced worsening drought, with Ukraine and southwest Russia experiencing yield-threatening dryness for corn and sunflower crops. Ukrainian traders, short on domestic supply, increasingly turned to neighboring Romania and Moldova to fill gaps.
South America’s outlook stayed positive. Brazil raised its soybean production forecast to 169.7 million tons, underpinned by expanded acreage and improved yields. Corn production also benefited from strong second-crop prospects. Argentina’s wheat remained vegetative and resilient despite cold snaps, though rain will be needed as the crop approaches heading. The country’s corn acreage is projected to expand by up to 20% for 2025/26, reinforcing Argentina’s growing export role.
Asia’s weather picture was mixed. Northeastern China enjoyed favorable conditions, but the North China Plain remained vulnerable to prolonged heat. The Chinese government allocated 1.1 billion yuan in disaster relief to stabilize autumn crop output, reflecting official concern over potential shortfalls. In India, heavy monsoon rains lifted prospects for winter planting, underpinning optimism for the coming season.

Transportation and Logistics

Logistical factors also influenced sentiment. U.S. barge shipments on the Mississippi River rose to 853,000 tons in the week ending August 9, reflecting seasonal movement ahead of the autumn harvest. Corn shipments fell 9% from the previous week, but soybean shipments surged 27%, alleviating concerns about transportation bottlenecks. This increase in soybean flow reinforced demand signals and helped support futures.

Volatility Set to Continue

The week closed with grain markets at a crossroads, balancing bearish global supply signals with bullish weather risks and demand resilience. Record U.S. soybean crush figures and Australia’s buoyant wheat outlook pressured prices, while persistent Black Sea drought, shifting trade flows, and strong demand for soybeans and feed grains added support. As Northern Hemisphere harvests progress and Southern Hemisphere planting accelerates, traders face an environment of heightened volatility, with weather, export data, and policy shifts likely to dictate direction in the coming weeks.