Insight Focus
During July, the entire grains complex rallied. A variety of factors supported price rises, including renewed tensions in the Middle East, intensifying strikes in Russia and Ukraine and extreme heat across major producing regions. However, a resolution to any of these issues could allow bearishness to penetrate the market.
Wheat Rises but Buyers Not Forthcoming
July was a volatile and ultimately supportive month for global wheat markets. Prices were driven higher by a combination of geopolitical disruption, tightening supply expectations and weather-related production concerns.
The dominant theme was the escalating conflict in the Black Sea region, where Ukrainian attacks on Russian shipping and export logistics, as well as oil infrastructure, raised serious doubts about the reliability of grain exports from the world’s largest wheat exporter.
Reports suggested that shipping through the Sea of Azov had been severely disrupted, while attacks around key ports and transport routes increased risk premiums across agricultural commodity markets. These developments helped propel wheat futures higher in both Europe and the US.
Weather concerns compounded the bullish sentiment. Heatwaves across North America and Europe accelerated harvest progress but increased concerns over yield losses and crop stress. In France and Germany, exceptionally hot and dry conditions reduced production expectations, while crop ratings declined for US spring wheat.
At the same time, the strengthening El Niño weather pattern heightened uncertainty over future production prospects in Australia and other Southern Hemisphere exporters, even as beneficial rainfall supported crops in Argentina and parts of North Africa.
However, despite rising futures prices and heightened geopolitical risk, physical buying remained relatively subdued. Major importers such as Egypt, Turkey and other North African nations appeared comfortable with domestic supplies and showed little urgency to chase the rally.
As July closed, traders remained focused on Black Sea export disruptions, Northern Hemisphere harvest results and the evolving El Niño outlook, all of which are likely to play a decisive role in shaping wheat market direction during the remainder of 2026.
Corn Pulled Up by Weather Risk
July began with a positive reaction to the USDA’s acreage and quarterly stocks report, which showed US corn stocks below market expectations while planted acreage remained unchanged at 95.3 million acres. The data eased fears of a larger-than-expected US crop and helped Chicago corn futures move away from the USD 4/bushel level.
Momentum strengthened further following the USDA’s July WASDE report, which delivered one of the month’s biggest surprises. The USDA reduced old-crop US corn ending stocks by 125 million bushels due to stronger feed demand and increased export expectations, while global corn stocks were cut by approximately 6 million tonnes. The report also highlighted declining European production prospects, reinforcing concerns about global supply availability.
Responding to extreme heat in Europe, Coceral reduced its EU+UK corn production forecast to 52.7 million tonnes, well below previous expectations. In the US, temperatures above 40°C in parts of the Corn Belt raised concerns about pollination and yield potential, although crop ratings remained relatively stable at 67% good-to-excellent.
Geopolitical developments added further support and renewed Chinese purchases of US soybeans improved sentiment across the wider grains complex. As July closed, traders remained focused on Northern Hemisphere weather risks, Black Sea logistics and the potential impact of any improvement in geopolitical tensions.
Soybeans Rise but Gains Limited
In July, soybean prices recovering from earlier weakness as renewed Chinese demand, geopolitical tensions and weather concerns improved market sentiment. Chicago soybean futures climbed back to around USD 12/bushel after trading below USD 11.50 for much of June. Chinese officials signalled a willingness to expand agricultural imports, while USDA export sales data confirmed purchases of 472,000 tonnes of US soybeans by China in early July, helping to trigger a rally in futures markets.
At the same time, record South American supplies continued to dominate global trade. Brazil harvested a record 180 million-tonne soybean crop and exported 14.5 million tonnes in June alone, with China remaining the destination for most shipments. Chinese imports remained exceptionally strong, reaching 13.55 million tonnes in June, the second-highest monthly total on record.
As July ended, the soybean market was balancing improved demand prospects against abundant global supplies. Traders remained focused on US-China trade negotiations, Northern Hemisphere weather and the pace of Chinese imports as key determinants of price direction for the remainder of 2026.
Barley Concerns Arise Over Quality, Yield
The global barley market strengthened during July as geopolitical disruption, weather concerns and rising grain prices combined to lift market sentiment. The most significant driver was the escalation of the Russia–Ukraine conflict, which disrupted Black Sea grain logistics and raised concerns about export availability from one of the world’s most important grain-producing regions.
These concerns were amplified by renewed instability in the Middle East and higher energy prices, with Brent crude returning to around USD 100/barrel and natural gas futures moving sharply higher.
Weather was the second major influence on barley markets. Across Europe, heatwaves placed crops under increasing stress during harvest, raising concerns over both yields and quality, particularly for malting barley. In contrast, favourable rainfall improved crop prospects in Canada, Argentina and Australia, leading analysts to maintain a relatively comfortable global production outlook.
