Carlotta De Pasquale
Market Analyst
Areté

The 2025/26 cereals landscape combines abundant supply with historically high demand, while the market’s most significant risks stem not from fields but from economics and geopolitics. Understanding this balance will be key to navigating the months ahead.

The 2025/26 marketing year opens with cereals markets particularly well supplied, as shown in Graph 1. Corn is leading this abundance, with production at an all-time high at the global level: the United States is harvesting a record crop thanks to an 8% expansion in planted area and yields up by 4%, pushing production 9% above the previous maximum. South America is also contributing strongly: Argentina is expanding output on larger acreage, while Brazil, despite expectations of yields closer to the average, remains near historically high production levels. Ukraine’s recovery in both area and yields after last year’s sharp decline also adds volume, even if output remains 11% below pre-war levels. The main exception is the EU, where drought-stricken yields and shrinking areas have pushed production down.

Graph 1: Global production per cereal, Million tons — Source: USDA

Wheat supply is similarly ample, with world production also at record levels thanks to increases in most of the main exporting countries. The EU is seeing a notable recovery, with higher acreage and the best yields since 2015 driving wheat production toward 142 million tonnes (Mt). Russia is also expected to harvest another large crop, with some local sources placing output as high as 87.5–88 Mt. Australia is rebounding thanks to elevated yields that offset smaller areas, a situation analogous to the one in the US according to the latest data revision. On the other hand, Ukraine’s production remains stable but structurally reduced, with planted area still around 20% below pre-war levels.

In particular, a stronger supply is also expected for the durum market, thanks to larger production in both importing and exporting countries. On the export side, both Canada and the United States are set to record multi-year highs thanks to expanded acreage and robust yields. As for the main importers, the European Union is posting its highest durum output since 2018/19, supported by increased sowings and record yields. In North Africa, after three consecutive years of severe drought, production is gradually returning toward its long-term average. Taken together, these developments translate into a net global recovery in durum availability for the season, with the highest production of the last 9 years.

The rice market is following a broadly similar pattern. Global production is expected to come just shy of last year’s record, while India—the world’s largest producer and exporter—is heading toward an all-time high, and China—the second largest producer— is also seeing a slight increase in its harvest.

Taken together, these developments mean cereals supply is abundant across the board, positioning this marketing year’s price volatility to depend far more on demand than on production shocks.

Demand, for its part, is also projected at record levels. Cereals consumption has been rising for decades, driven by population growth and by the expanding use in both feed and energy production (Graph 2).

Graph 2: Global Consumption of cereals and world population, Million tons and Million People — Source: USDA, IMF

In particular, one factor contributing to rising global demand is the increasing production of ethanol. Both the global production and consumption of this biofuel have grown by 22% over the past decade, with the OECD projecting a further 12% increase in the next 10 years (Graph 3). This has increased the demand for corn especially, as it accounts for a significant share of ethanol production: it represents the main feedstock used in the US, the world’s leading producer, while in Brazil, the world’s second-largest producer, corn-based ethanol is experiencing rapid growth, complementing traditional sugarcane-based production.

Graph 3: Global production and consumption of ethanol, Million tons — Source: OECD

All major cereals are expected to reach all-time-high consumption in 2025/26, yet in some areas sluggish economic growth is hampering demand growth, with China remaining a critical variable: as one of the world’s largest importers of energy, feed, and staple commodities, fluctuations in its economic performance can influence cereals markets both directly and indirectly through freight, energy, and oil channels.

Still, much of the volatility observed in recent months has not come from fundamentals but from macroeconomic and geopolitical factors. In 2025 the Euro strengthened against the US Dollar despite the interest-rate gap between the FED and the ECB, driven largely by uncertainty around the new US trade war; this stronger euro contributed to easing European import prices for products like corn and durum wheat. Maritime disruptions have also played a role: the difficulty of commercial transit through the Bab-al-Mandeb Strait caused severe distortions in Asia–Europe trade routes, helping keep Indica rice prices in the EU near record highs even as global benchmarks collapsed in price. More recently, hopes for a US–China trade deal triggered a rally in soybeans that spilled over into corn and wheat, an effect amplified by the temporary absence of official US crop data during the government shutdown.

Looking ahead, both consumption trends and macro-geopolitical variables will continue to shape market conditions. The record-level global supply of corn, wheat, and rice should limit the likelihood of sharp bullish spikes of the kind seen in 2022, though relative abundance will influence spreads between regions, as can be seen in the above-average premium of EU corn prices on international benchmarks following this year’s poor harvest.

However, countries with high import needs or heavy reliance on export markets may remain more exposed to volatility. Using the pendulum metaphor of globalization, swinging between phases of deeper global integration and periods of local fragmentation, many analysts argue that the world is now in a phase of deceleration, if not partial reversal, of globalization. For food-import-dependent regions or major agricultural exporters, this shift could amplify the long-term impact of trade tensions, logistical disruptions, and geopolitical realignments.

In sum, the 2025/26 cereals landscape combines abundant supply with historically high demand, while the market’s most significant risks stem not from fields but from economics and geopolitics. Understanding this balance will be key to navigating the months ahead.