Policy and Structural Trends Shaping the Outlook

Several major policy and structural developments during the week reinforced a fundamentally well-supplied global grains environment, even as they introduced new layers of regulatory and trade complexity.

A key headline was the European Union’s provisional agreement to delay by one year the application of its Deforestation Regulation (EUDR), a law targeting deforestation linked to imports of commodities such as soybeans, coffee, cocoa and palm oil. EU institutions agreed to push back implementation and to simplify some requirements in response to criticism from producing countries and EU industry about administrative burdens and potential trade disruption.

The deferral eases near-term risk premiums around compliance for exporters of soybeans and other EUDR-covered commodities into the EU, but it does not remove the structural push towards stricter sustainability and traceability standards. From a price perspective, the delay reduces the probability of abrupt trade rerouting this season, which supports the continuation of current flow patterns and keeps the focus on fundamentals rather than regulatory shocks.

On the fundamental side, the UN Food and Agriculture Organization (FAO) raised its outlook for 2025–26 global grain production to a new record 3 billion tons, up from 2.99 billion tons in its previous estimate, with the revision driven mainly by better wheat production prospects. The FAO also lifted projected global grain stocks to a record 925.5 million tons and forecast the global stock-to-use ratio rising to 22.3 percent, the highest level since the early 1990s.

These numbers are structurally bearish for benchmark grain futures, since they confirm that, in aggregate, the world is moving into the new season with comfortable buffers and reduced vulnerability to single-region shocks.

In North America, Statistics Canada raised its official estimates for 2025 wheat production to 40 million tons, about 3.3 million tons higher than its previous estimate and above earlier analyst expectations, and increased canola output to 21.8 million tons.

At the same time, Canada’s 2025 corn crop was trimmed modestly to around 14.9 million tons, down 3.1 percent from last year, although this adjustment is small relative to global corn supply.

In the United States, the US Grains & BioProducts Council released its annual corn quality report, projecting the 2025–26 US corn harvest at a record 425.53 million tons with record average yields of 186 bushels per acre and the lowest share of broken kernels and foreign material in the 15-year history of the report.

The combination of record size and very high quality underscores strong export competitiveness for US corn, particularly into markets that prioritise quality and reliability.

Russia, already a dominant wheat exporter, also reported strong underlying capacity. Argus’ virtual crop tour forecasts 2026–27 Russian wheat output at 86.5 million tons, broadly in line with the five-year average and only slightly below the current season’s 88.4 million tons, with good soil moisture conditions replenished even in previously dry regions such as Rostov and parts of Krasnodar.

Separately, Russia’s agricultural statistics highlighted a 15.8 percent year-on-year reduction in grain sales in the first ten months of 2025, reflecting both high carry-over and producer decisions to hold grain, but exports of oilseed meals from sunflower, rapeseed and soybeans are forecast to reach a record 4.4 million tons, driven by a record 32–33 million-ton oilseed crop and full self-sufficiency in soybeans in the European part of the country.

This is structurally bearish for global meal prices, particularly for soymeal in nearby regions.

In Ukraine, the policy signal remained that exports will continue to flow despite war-related risks. The Economy Ministry reiterated that Ukraine’s 2025 grain harvest may reach 60 million tons of grains and up to 20 million tons of oilseeds, with roughly two-thirds earmarked for export, confirming the country’s role as an “important guarantor of global food security.”

However, exports of grains and legumes since 1 July totalled 12.14 million tons as of 28 November, 32 percent below the same period a year earlier. Wheat shipments were down 17 percent, barley 37 percent and corn 50 percent year-on-year, illustrating how Black Sea logistics and security constraints continue to cap realised exports even when production is good.

At the same time, Ukrainian lobby UCAB reported that agricultural exports in November rose 12 percent versus October to around 5 million tons, with grain exports increasing to 3 million tons and oilseed shipments up 14 percent, suggesting that the new export corridors and alternative routes are gradually improving flow capacity.

The Ukrainian Grain Association projected that total grain and oilseed exports in the 2025–26 season could reach 49 million tons, up from 46.7 million tons last year, provided that Russian strikes do not severely damage energy, port and railway infrastructure.

Finally, vegetable oil policy and trade continued to influence oilseed sentiment. India’s rare forward purchase of large volumes of South American soybean oil for April–July 2026, driven by expectations of higher palm oil prices once Indonesia raises its biodiesel blend mandate to B50, underlined the structural link between biodiesel policy and veg-oil balance sheets.

In the near term, however, Indian refiners cancelled around 70,000 tons of crude soyoil imports for December–January as global soyoil prices rallied to four-month highs and the rupee weakened, making domestic soyoil cheaper than imports and pushing buyers towards palm oil, which is currently trading at a significant discount.

This substitution dynamic can dampen short-term demand for soyoil and support palm, while reinforcing the idea that the broader oilseed complex remains well supplied.

Futures and Price Developments

Chicago markets spent the week in a consolidating, mildly bearish pattern for corn and soybeans and a mixed tone for wheat.

On Monday 1 December, futures opened under pressure: overnight trade had wheat down 4¾ cents in soft red winter (SRW) and 4¼ cents in hard red winter (HRW), corn down 2½ cents and soybeans down 4¼ cents, following a prior week in which wheat had already slipped and corn and soybeans had posted moderate gains.

By Tuesday, the tone had not changed much, with overnight markets showing wheat again lower in SRW and HRW, corn flat, and soybeans modestly higher; for the week to date, wheat was down 6¾ cents in SRW and 4¾ cents in HRW, corn down 2 cents, soybeans down 2½ cents and soymeal down almost 4 dollars, while soyoil still held a small week-to-date gain.

Mid-week, the picture started to turn for wheat. On Wednesday 3 December, overnight prices showed SRW and HRW slightly softer, but cumulative weekly changes flipped to small gains in SRW and more noticeable strength in HRW, while corn was marginally higher for the week and soybeans were 10¼ cents lower.

Thursday’s update confirmed a further divergence: for the week so far, wheat was unchanged in SRW and up 2 cents in HRW, corn was now down 5 cents, soybeans were down nearly 20 cents and soymeal down 6.50 dollars, highlighting persistent pressure on the soy complex even as wheat began to stabilise.

By Friday 5 December, the weekly pattern was clear. Overnight moves left SRW wheat down 3 cents and HRW down 1¾ cents on the day, but on a week-to-date basis SRW was still fractionally higher and HRW was up 6½ cents. Corn was down 1¼ cents overnight and 1¼ cents lower for the week, confirming a modest downward correction after November’s firmness. Soybeans were down another 2½ cents overnight and 20¾ cents on the week, with soymeal off 8.80 dollars and soyoil fractionally lower.

Year-to-date performance reinforces the impression that 2025 has been a relatively soft year for grains but considerably better for oilseeds, especially vegetable oils. By the end of the week, nearby futures were down between 1.9 percent and 5.3 percent across the three US wheat classes, corn was down 4.5 percent, while soybeans were still up almost 12 percent and soyoil nearly 30 percent year-on-year.

This divergence reflects ample global grain supply and ample but more finely balanced oilseed and oil markets.

Weather and Crop Conditions

Weather developments this week were mixed, with broadly favourable conditions for Northern Hemisphere winter wheat and more nuanced risks for South American corn and soybeans.

In North America, a major cold air outbreak continued to reinforce frequent snow events over the US Northern Plains and Midwest. Forecasts call for repeated pushes of cold air with occasional snow through mid-December, with winterkill temperatures in northern US winter wheat areas but adequate snow cover across most of these regions, which should protect dormant crops.

The Central and Southern Plains experienced multiple frontal passages, bringing intermittent showers and colder air early in the week, followed by brief warm-ups as the storm track temporarily shifts northward.

Overall, there is no immediate large-scale threat to US winter wheat, though the cold reinforces dormancy and ends prospects for any remaining late fieldwork.

The Mississippi River system remains a secondary concern. Snowfall in the Midwest and local precipitation in the Delta are providing some support to water levels, but forecasts still point to a slow decline over the next couple of weeks due to the lack of heavy precipitation, which may keep barge logistics somewhat constrained into December.

In South America, weather remains the key driver for soybean and, to a lesser extent, corn sentiment. Central Brazil has spent several weeks dealing with irregular rainfall, particularly in Mato Grosso, Goiás, Maranhão and Piauí, leading to slower soybean planting and increased uncertainty around yield potential. Cepea noted that Brazilian soybean sowing had reached 78 percent of the area by 22 November, below the 83.3 percent pace a year earlier, with a heterogeneous rainfall pattern and excess moisture in the south complicating field access in different regions.

Market participants highlighted that the irregular weather over the past three months has raised questions about productivity in the 2025–26 crop.

Daily weather commentary through the week emphasised that, while a frontal system has stalled over central Brazil bringing much-needed showers and improving soil moisture, particularly for developing soybeans now entering flowering, the frequency of rainfall in southern Brazil has declined, initiating a slow drying process that could become more problematic if it persists into late December and January.

Argentina presents an opposite but equally nuanced story. Forecasts indicate that Argentina will experience hot and predominantly dry conditions on balance into the foreseeable future, with only patchy showers arriving with passing fronts. The pattern of heavy rain events sandwiched between long stretches of dryness is already producing variable conditions for developing corn and soybeans, even though soil moisture is still considered largely favourable at this stage.

Persistent heat risks over coming weeks are flagged as a key downside risk for Argentine corn and soybeans if rainfall fails to materialise on a timely basis.

Elsewhere, Europe’s winter wheat crop is entering dormancy under mostly favourable moisture conditions. Frequent Atlantic systems are providing additional precipitation to the northwest and to Spain, where soil moisture support for vegetative wheat is particularly welcome.

In the Black Sea region, systems have recently targeted Ukraine and north-western Russia with scattered precipitation, improving conditions compared to earlier in the autumn, but significant deficits remain in parts of south-western Russia. Above-normal temperatures have slowed dormancy, although cooler averages are gradually bringing winter wheat into a safer dormant stage.

South Africa, finally, is expected to benefit from cool and wet conditions over the next couple of weeks, which should support early maize development, while Paraguay’s soybean crop has experienced a modest development delay due to earlier cool weather but is not yet considered at risk, with good soil humidity and river levels supporting future export logistics.

Market Balance and Outlook

Taken together, the first week of December confirms a global grain and oilseed complex that is structurally well supplied on paper, with record or near-record production projections in the United States, Canada, Brazil, Russia, Australia and Argentina, and a FAO forecast of record global grain stocks and the highest stock-to-use ratio in decades.

Prices have reacted accordingly. Wheat is largely range-bound, with modest strength in higher-protein HRW reflecting quality and demand nuances, while corn and soybeans are under gentle but persistent downward pressure as markets digest record crops and strong export availability from multiple origins.

At the same time, the week underscored that the real risk factors for the coming months lie less in aggregate supply and more in distribution and execution. For grains, those risks include Black Sea logistics and infrastructure security in Ukraine, river levels for barge exports in North and South America, and any surprise policy shifts in major exporters. For oilseeds, they include central and southern Brazilian rainfall patterns, Argentine heat and dryness, China’s import management strategy, and biodiesel-driven shifts in palm and soyoil demand.

For now, the balance points to a market that will likely remain sensitive to short-term weather headlines and geopolitical news, but where rallies may be capped by the sheer scale of projected supply and stocks. Unless South American weather deteriorates sharply or a major trade or policy shock emerges, the price tone for the coming weeks is likely to remain mildly bearish to sideways, with spreads and basis doing most of the work of rationing logistics and quality rather than outright futures levels.