Summary

MIDDLE EAST CONFLICT

The conflict in the Middle East has sparked concerns about risks to agricultural supply chains, particularly related to rising fertiliser costs and higher fuel prices. The Strait of Hormuz, the waterway linking the Persian Gulf to the Arabian Sea, serves as the maritime exit point for approximately 25% of the world’s oil supply and 20% of liquefied natural gas (LNG) exports. The region is also a major hub for fertiliser production and trade, accounting for as much as 35% of global urea exports and up to 30% of ammonia shipments. In the absence of strategic stockpiles and, with existing constraints is some other suppliers, recent shipping disruptions and closure of some local production facilities have sparked steep gains in fertiliser prices.

Although most northern hemisphere grains and oilseed producers are assumed to be sufficiently well covered heading into the spring fieldwork period, an extended crisis might affect planting decisions elsewhere later in the year, with parts of Asia and Africa especially dependent on Gulf fertiliser supplies. More broadly, a prolonged disruption could lead to a revaluation of fertiliser application rates, with possible implications for yields and crop quality.

The conflict has also exposed regional food security vulnerabilities. On average, around 2m t of grains, oilseeds and associated products are delivered monthly to the Persian Gulf via the Strait of Hormuz. Although only accounting for around 3% of total trade, Persian Gulf countries are highly dependent on imports, with elevated per capita consumption of wheat and rice also notable in some countries. With the main maritime supply line effectively closed, alternative routes are also limited, but with some re-routing possible via the Red Sea shipping lane or Caspian Sea. While local reserves should provide a short term buffer, food supply challenges could build should disruptions extend beyond a few months.

HIGHLIGHTS

The forecast for global total grains (wheat and coarse grains) production in 2025/26 is hiked by 10m t m/m (month-on-month), to 2,470m, mainly on upgrades for maize (including India) and wheat (Russia, Australia). Most of the larger supply is absorbed by increased consumption, pegged 8m t higher, at 2,423m, but with the stocks estimate (aggregate of respective local marketing years) also upgraded, to 632m.

Tied to a projected reduction in harvested area and yields, world total grains output is projected to drop by 2% in 2026/27. With a high level of opening stocks offering only partial offsetting, total supply is forecast slightly down y/y (year-on-year). Consumption is forecast to increase for a fourth year in a row, to a new record, led by gains in food and industrial uses. After an accumulation in the prior season, carryover stocks could tighten again, while trade is forecast to be little changed overall.

Reflecting downgraded figures for Brazil and India, world soyabean output in 2025/26 is seen 2m t lower m/m, at 426m, just a shade down y/y; accordingly, fractional downward adjustments are made to total use and stocks. Looking ahead, a record world outturn is tentatively anticipated in 2026/27 and, given heavy availabilities, processing is projected at a new peak, as stocks edge higher. Traded volumes could expand by 2% on shipment flows between South America and Asia.

There are few changes to the 2025/26 global rice supply and demand outlook, with trade expected to climb to a record of 59.5m t (+2%). Based on modest acreage gains and trend yields, world production is projected at a peak in 2026/27. Increases are also predicted for both consumption and trade, rising to fresh highs, while global stocks are seen expanding on accumulation in India.

With mixed movements across the component commodities, the IGC Grains and Oilseeds Index (GOI) gained by 1% m/m.

At 2,470m t, world total grains production will be the largest on record in 2025/26, up by 143m t y/y, including solid gains in maize (+79m), wheat (+44m) and barley (+11m). While consumption is also forecast at a new peak (+73m t), the large supply boost will enable some stock rebuilding, pegged at a six-year high of 632m (+47m). Led by larger wheat and maize flows, total trade could reach 632m t, a y/y gain of 25m.

Global wheat and coarse grains harvests are projected to be smaller in 2026/27, with cumulative output seen 53m t below the prior season's record, at 2,417m. Total supply is expected contract for the first time in four seasons, but could still be in excess of 3.0bn t. Despite an anticipated modest slowdown in consumption growth, uptake is tentatively seen 17m t higher, at 2,440m. Cumulative end-season inventories are placed at 609m t, down by 23m y/y, with most of the fall in the major exporters.

Boosted by Asian demand, global soyabean trade is projected at a new peak in 2025/26, with South American suppliers seen taking a great share of overall volumes. With acreage gains in major exporters anticipated, world harvested area is tentatively predicted to rebound in 2026/27 as production reaches a record of 442m t (+4%). Since the net increase in supplies is broadly matched by growth in total use, combined inventories are seen little-changed y/y. Trade is projected at a high of 190m t (+2%).

After a year of record production and consumption, the Council's projections for 2026/27 point to a further increase in global rice output, while growing populations in sub-Saharan Africa and South Asia are expected to boost world use. The resulting expansion in food requirements is seen underpinning gains in trade, predicted at a new peak of 60.9m t (+2%).

After touching a record in 2025/26, world broad beans output could fall slightly in 2026/27. However, with uptake likely to expand further on gains in North Africa, inventories may tighten. Trade in 2027 is tentatively pegged at 1.3m t, near-unchanged y/y and above average, underpinned by shipments to North Africa, Europe and the Near East.

MARKET SUMMARY

Grains export prices mostly firmed in the period since the last report, partly reflecting linkages to rising energy markets. Crude oil strength also offered support to soyabean values, but with renewed uncertainty about future Chinese demand weighing more recently. While average rice prices were also softer, the IGC GOI gained by 1% m/m.

With global wheat markets often taking direction from broader geopolitical developments and surging crude oil values, the IGC GOI wheat sub-Index strengthened by a net 6%. US price support also stemmed from local weather worries.

Boosted by spillover from energy markets and overall strong demand, the IGC GOI maize sub-Index was 2% higher compared to the February GMR, recently touching a 10-month peak.

The IGC GOI rice-sub-Index eased by 3%. Traders reported subdued buying interest, partly tied to volatility in both container and dry bulk shipping rates amid ongoing hostilities in the Persian Gulf.

The IGC GOI soyabeans sub-Index was 1% softer, chiefly on a retreat in fob values in Argentina.