Timely rainfall and cooler temperatures supported spring wheat grain filling in both the US and Canada.
As a result, the Minneapolis December/25 futures contract fell 4.9 per cent MOM to AUD 338/tonne.
In Europe, harvesting advanced without significant changes in total production.
The MATIF December/25 contract declined 1.9 per cent month-on-month (MOM) to $A362/tonne, further pressured by Russia’s decision to remove its export duty.
With little incentive to hold grain, Russian farmers are expected to keep markets well supplied through the second half of 2025.
Locally, the ASX January/26 contract followed the global downturn, falling 1.5 per cent MOM to $A334/tonne.
Barley and other feed grains face additional headwinds from a projected record US corn crop of 399 million tonnes in 2025 – potentially 10m tonnes above the 2023 record.
Recovery in EU corn and barley crops this year adds to the bearish tone.
CBOT spot corn fell 6.6 per cent MOM to $A218/tonne, which hinders Australian feed barley export potential. For instance, Geelong spot feed barley at $A321/tonne is 47 per cent above CBOT corn on a FOB basis –a decile 7 price spread by historical comparison.
The global cereals outlook remains clear: ample supply is expected in the coming months, and prices are unlikely to rise unless there is a major new shift in fundamentals.
On the geopolitical front, trade agreements between Asian nations and the US could erode Australia’s market share in the region.
Indonesia signed a memory of understanding to import 1 million tonnes of US wheat annually, and Bangladesh has followed suit with an agreement for 0.7 million tonnes – both aimed at easing tariffs. While Bangladesh is a minor wheat market for Australia, Indonesia is a key buyer, accounting for more than 15 per cent of total wheat exports between 2020 and 2024.
What to watch:
After a very late season break in South Australia and Victoria, July brought above-average rainfall, replenishing soil moisture across most regions. If forecasts for continued rainfall in the eastern states and South Australia hold, Australia’s national wheat crop could exceed 32m tonnes, adding further supply to an already pressured global market.
Russia introduced stricter controls on foreign vessels entering its ports following sabotage. While this is expected to cause minor delays in grain loading and exports, the situation could escalate quickly as the war in Ukraine continues.
The canola harvest is underway in Europe with no major drawbacks, and total supply estimated at around 19.0m tonnes –1.2m tonnes above the five-year average.
In Canada, crop conditions are holding up well following improved rainfall in late July.
While the 2025 crop may be 0.6 million tonnes short of the five-year average of 18.4 million tonnes, the latest Agriculture and Agri-Food Canada report stated “canola exports reported by the Canadian Grain Commission are outpacing last year by 51 per cent with steady producer deliveries, indicating there is still inventory being moved off-farm”.
With key canola producers holding sizeable crops and replenishing their stocks, prices have been relatively stable over the past 30 days. The MATIF Feberuary/26 contract fell by just 0.4 per cent to $A868/tonne, while the ICE March/26 contract dropped by 1.2 per cent to $A799/tonne.
Despite strong demand for soybean oil, ample global soybean stocks and the prospect of another large US crop continue to weigh on oilseed prices globally. Given this solid oversupply outlook, price movements in the coming months are expected to be heavily influenced by geopolitics.
In early July, during the Australian prime minister’s visit to China, it was announced China would ease canola import requirements and accept five trial shipments with screenings capped at 1.0 per cent.
No further updates have followed, and Australian prices have continued to track global trends.
For instance, Geelong non-GM canola dropped 3.4 per cent to $A724/tonne during July.
Still, this development highlights how quickly trade dynamics can shift with diplomatic moves.
Opening the Chinese market could prove a major support factor for Australia.
In 2024, China imported 6.4m tonnes of canola seed, 96 per cent of which came from Canada. Meanwhile, Australia exported 51 per cent of its 6.2m tonnes to non-European destinations.
While global trade flows are not easily redirected by handshakes, 2025 has already shown that unexpected decisions can reshape markets and influence prices.
Despite all, 2025/26 supply appears solid
What to watch:
Black Sea dryness and locusts– Hot and dry conditions in south-east Ukraine, southern Russia, and Bulgaria are threatening sunflower yields, and Ukrainian farmers face added pressure from locust swarms, which are damaging crops. EU sunflower crushing typically ranges between 5 million tonnes and 6 million tonnes annually, forming a key part of the region’s vegetable oil supply.
Canada’s harvest kick-off– Although Canada’s official 2025/26 canola forecast stands at 17.8 million tonnes, late July rainfall and cooler temperatures could give yields a last-minute boost, with some models pointing to nearly 19 million tonnes. This would more than offset Ukraine’s expected 0.7 million tonne year-on-year decline.
