Weekly Grains Outlook
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Wheat opinion
📉 Sentiment Indication: The wheat market recovery has gone into reverse, weighed by northern hemisphere harvest pressure.
This harvest will take an increasing market profile, including in Europe, albeit that EU all-wheat production is expected to shrink markedly from last year’s 145Mt. The USDA forecasts harvest-26 at 136.0Mt.
However, the price correction has left European wheat prices at technical support levels, even as geopolitical risks have increased too.
Longer term, higher energy prices and uncertainty over fertiliser supplies are providing a more structural case for supply contractions due to reduced yield, as well as higher demand from the biofuel sector.
The coming months will be defining, both in terms of weather conditions and geopolitics, and with 2027/28 autumn planting decisions to take a bigger focus too.
Market update
Grain markets have received a double reminder of the importance of geopolitics for prices (watch the latest video).
Not only have renewed Iran-Israeli hostilities revived Middle East tensions, sending oil prices higher and eroding further hopes for the return of the status quo to the Persian Gulf, but the dollar has revived too, on strong US employment data. US non-farm payrolls increased by 172K jobs last month, well above the 85K figure economists had expected, and a number seen as boosting the chances of a US interest rate rise.
Both factors are influential for global grain prices – if, from a US perspective, contradictorily so.
The strengthening in the dollar to two-month highs against the euro weighs on US prices, in cutting the competitiveness of the country’s exports of the likes of wheat, pushing demand to regions such as Europe and the Black Sea, theoretically.
Rising oil, by contrast, is supportive for grain prices overall, against which crude values have historically firmly correlated, for reasons of cross-commodity investment as well as specifics such as ags’ use as biofuel feedstocks. The correlation between spot Chicago wheat and spot Brent crude so far this century is 79%.
With wheat prices already having already corrected from mid-May highs, largely thanks to pressure from the 2026 harvest, it was buying which dominated in early deals on Monday. This especially so in Europe, of course, where the euro’s retreat versus the dollar enhanced the buying opportunity, with prices ending last week at key support levels.
Whether prices now renew their fall - as they did in 2024, declining to a low of $5.14/Bu in late July – will depend at least in part on factors such as results from the US harvest, and those from elsewhere in the northern hemisphere.
Certainly, the extent of harvest to come - including in geographies such as Europe, where weather fears have eased, and the Black Sea, where crop estimates are expanding – make it unlikely wheat will sustain a meaningful recovery without fresh catalysts, such as challenges for the US corn crop or a resurgence in energy prices.
Still, fundamentals offer upside risks too, including the potential for raised Chinese imports, after rain setbacks to quality at least.
History certainly suggests scope for volume growth. China’s imports of 2.4Kt in the first four months of 2026, while up 136% year on year, are well below half levels reported for the same periods of 2023 and 2024.
Fund attitude will be important in determining direction, at least short-term, and how significantly eg geopolitical events scramble the narrative of harvest pressure which they had appeared comfortable with.
Managed money sold 38.5K contracts in Chicago soft red winter wheat futures in the week to 2 June, the biggest selldown since December 2017. Combined selling in US soft red, hard red and spring wheat futures was, at 57.7K contracts, the second largest on data going back 20 years. Funds have been selling in Paris too.
Still, as CRM Agri highlighted earlier today, the coincidence of geopolitical support with technical indicators indicate an opportunity for buyers to extend forward cover. The USDA’s Wasde report, on Thursday, adds to potential for volatility this week.
In other years of poorly-rated US crops, such as 1996, 2022 and 2023, June Wasdes have lifted estimates for the US wheat yields. However, in those years, crop condition scores started recovering in May – unlike this time.
Corn opinion
📉 Sentiment Indication: Corn prices have come under pressure from South American harvests, rapid US sowings and a lack of evidence for Chinese purchases from the US.
New crop risks remain, particularly with higher input costs and the potential for ongoing disruption to the flow of energy and fertiliser through the Strait of Hormuz. This was compounded by the USDA, which cut major exporter corn stocks by 4.7Mt year on year to 67.2Mt.
Geopolitical risks, higher input costs, and the upcoming key growing months for northern hemisphere corn will continue to keep corn prices underpinned. Uncertainties over prospects for the EU crop remain marked, given weak sowings in France and a return of hot and dry weather.
Market update
CRM Agri has been flagging in past analysis the seasonal pattern for US corn prices to retreat from late May into harvest.
This time, the correction has been particularly fast.
Having risen during the spring as long-term seasonal patterns would suggest, Chicago corn futures have from mid-May tumbled unusually rapidly, by 13% July-26 basis, to contract lows.
Some loss of risk premium has certainly been warranted, after a US planting programme nearing completion without too many hitches, and at a faster-than-average pace.
However, South America is also offering enhanced bearish price influence.
Brazil’s corn harvest is, so far, proving promising – at least, so results show from Mato Grosso, the top producing state, where research institute Imea last week nudged its harvest estimate higher by 700Kt to 53.3Mt, the second largest on record.
Meanwhile, competition is showing on export markets from Argentina’s ongoing and record harvest. Argentine corn prices have dipped markedly in a quest for business – even opening up a discount of more than $40/t FOB to Argentine wheat, besides of about $25/t to US corn. Argentine corn exports in April topped 5.0Mt for the first time.
The US corn market is particularly sensitive to export competition given high hopes for the country’s own shipments, forecast by the USDA jumping by more than 10Mt to an all-time high of 83.8Mt this season, and with a campaign pegged for 2026/27 (as starts in September) at 80.0Mt, which would be the second largest on record.
The dollar’s strengthening, on strong US jobs data (see above), has only enhanced the pressure on US prices in undercutting their competitiveness.
EU prices, meanwhile, remain in the different orbit highlighted last week. Paris August-26 futures are down only 1%, in dollar terms, over the last three weeks, versus the 13% slide for Chicago’s July-26 contract.
The trend is echoed in new crop prices too, albeit to a smaller extreme. The Paris November-26 contract is down by 4%, versus an 11% dip in Chicago December-26 futures.
Europe’s confidence in its corn supplies, weakened by disappointing domestic output and poor Ukraine export availability, appears modest even into next season, a view supported by French forecasts of its second-lowest sowings this century.
Nonetheless, with global corn export supplies looking ample, European corn’s premium looks excessive at $88/t over Chicago spot basis, is twice the 10-year average, and close to 2022 highs.
Signs of decent EU, and Ukraine crops, would be one obvious source of downside risk for Paris values.
Meanwhile, the potential for Chinese purchases of US supplies is a key foreseeable upside risk for Chicago values – albeit that as geopolitics poses the potential for plenty of other outcomes too, as recent days have reminded the market.
