Weekly Grains Outlook
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Wheat opinion
📉 Sentiment Indication: Wheat markets have had plenty to digest over the past week, but overall, at least for now, the supply situation and geopolitical environment remain supportive for wheat prices.
Wheat markets have turned a corner, and we see the cyclical lows, which we discussed in November, having now been confirmed. A recovery will not be linear and volatility remains high. However, stocks are tightening, and investors are returning to a net long position.
Higher energy prices and uncertainty over fertiliser supplies are providing a more structural case for longer-term 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, with the clock running down on autumn planting decisions and increased demands of the summer driving and flying season.
This week we will publish our price forecasts which include longer term analysis and market forecasts.
Market update
Over the past week, wheat markets have found support from multiple angles. US winter wheat crop ratings have fallen to a four-week low of just 28% good-to-excellent, reaffirmed by the USDA, which cut the US wheat harvest for 2026/27 by 21% to 42.5Mt. This would be the lowest since 1972 and was 5Mt below pre-report market expectations.
Overall, major exporter crops seem to be moving in the opposite direction to last season, which recorded increases in production in all these countries. In its first official estimate for the upcoming harvest, the USDA made cuts to all the key exporting nations’ crop prospects, reducing global wheat production by 25Mt to 819Mt.
Despite the lower harvest prospects and supply threats, physical availability and FOB (export) pricing should not be ignored. These highlight a less acute shortage than the headlines suggest.
Larger EU stocks and improving outlooks for North African crops and the upcoming harvest are creating a headwind for EU FOB prices. Recent reports of US purchases of EU wheat help the situation, but recent rains have alleviated some concerns.
Current FOB prices in Europe and the Black Sea, ranging from $240-250/t, highlight the regionalised pricing structure of global markets, with premiums currently focused on US and southern hemisphere markets. Short of drought pre-harvest, it remains a comfortably supplied EU market, which should limit upside through the harvest period, by which point more will be known about farmer planting intentions, in response to fertiliser and energy markets.
Weather threats remain, with El Niño chances strengthening to an 82% probability of developing during May-July 2026, causing particular concern for Australian production based on the historical impacts of the weather phenomenon, and with a 96% chance of it arriving between December 2026 and February 2027.
Corn opinion
📉 Sentiment Indication: Despite a broadly supportive USDA report, corn prices came under pressure as hopes of US corn sales to China faded, with a lack of meaningful statements following President Trump’s visit to Beijing last week.
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, as we highlight in this week’s upcoming Forecast Report.
Market Update
Corn was choppy over the past week following cuts major exporter stocks by the USDA with the lack of material statements on trade following Trumps’ visit to China.
Amidst the noise, biofuel demand remains robust with ethanol production up 9% last year, maintaining a strong pace vs 10-year average levels; higher energy prices remain favourable to corn prices moving forwards.
Ukraine’s Grains Association sees the country’s corn crop rising to 32.6Mt in 2026, with corn exports increasing by 4Mt to 26Mt, 18% higher than last season and in line with recent estimates for the 2026/27 season.
France’s corn area is expected to fall by 11% this year to 1.44Mha as the impact of higher energy and fertiliser prices compound the impact of low grain prices overall. The French spring wheat area was also cut by 8% and the spring barley area slashed by 16% as poor malt demand and weak premiums reduce the incentives for Europe’s growers. However, oilseeds including rapeseed, sunflowers and soybeans are all seen graining area according to France’s Ag Ministry.
Rains across Europe and the Black Sea, which have improved conditions for the 2026/27 corn crop, have been welcomed after a nerve-racking dry period for north and west Europe. On the physical market, Ukraine’s corn prices sit around $240 FOB whilst French origin is being quoted at $229.
The rise and fall of corn prices over the week continue to highlight a range-bound trade torn between geopolitics and weather. It will be a volatile summer, with managed money now holding a considerable net long of 300K contracts in corn, offering downside risks to prices, as was underscored by the 35c$/bu sell-off in corn futures late last week, which we had warned of earlier in the month.
