By Ulf Bergman
Over the past two and a half weeks, grain and oilseed prices have soared. This follows a few months of volatility across the agricultural commodities market. Renewed concerns over supplies, amid an escalation of hostilities between Ukraine and Russia that is affecting exports from the Black Sea region, have contributed to gains in wheat prices over the past few weeks. At the same time, concerns over US crop yields have supported corn prices. In contrast, demand has been the primary driver for soybeans. The recent gains have propelled wheat and corn futures to their highest levels in just over three years, while soybean contracts are trading at levels last seen in May 2024.
The September futures for grains and oilseeds listed on the Chicago Board of Trade (CBOT) have recorded significant gains over the last two and a half weeks. The September soybean futures have gained around eight per cent since the eleventh, while the wheat and corn contracts have surged by around fifteen per cent over the period.
In a development that could potentially take some pressure off the world’s wheat importers, India lifted its wheat export ban earlier in the week. The move expanded on a February decision to allow limited exports and took effect immediately, paving the way for more substantial wheat shipments from India, as the country’s inventories are projected to reach record levels. The last time India allowed major wheat exports, in the financial year of 2021/22, the country shipped approximately seven million tonnes. Given that India’s wheat production has reached an all-time high of 120.6 million tonnes, the scope for exports may be greater than five years ago.
Global Grain and Oilseed Seaborne Exports Seeing a Slow Seasonal Recovery
The second seasonal pickup in global seaborne shipments of grains and oilseeds typically begins in the second half of the year, following weakness in June. However, this year, after year-on-year increases for each month during the first half of the year, Signal Ocean’s data points towards a softer-than-usual start to the second half.
Global seaborne export volumes of grains and oilseeds were one per cent lower in July than during the same period a year ago. With only days left in August, the current month could also see a shortfall compared with last year as recent daily volumes are weaker than in 2025.
According to data from Signal Ocean, aggregate seaborne export volumes of grains and oilseeds reached nearly 313 million tonnes during the first half of the year, representing a year-on-year increase of 13.4 per cent. Most of the growth was realised between March and May, with Brazilian exports accounting for much of the increase in Chinese demand. Over the past three years, both halves of the year have recorded the higher reading. Hence, it is not guaranteed that volumes in the first half of the year will be higher than in the following six months.
Annual seaborne volumes for grains and oilseeds grew by five per cent in 2024, compared with the year before. However, last year’s aggregate remained more or less unchanged, with growth at a fraction of a per cent. Therefore, a repeat this year would spell bad news for the trade’s demand for seaborne transportation, given the high volumes during the first half. No growth would imply a year-on-year decline of around twelve per cent for the year’s final six months. Even assuming annual growth in seaborne flows of grains and oilseeds matching 2024 would imply that volumes in the second half of the year would be around three per cent lower than in the same period last year.
Factors Affecting the Volumes During the Remainder of the Year
There is little to suggest that global demand for grains and oilseeds is facing any significant headwinds. While higher inflation and pressure on global economic growth in the wake of elevated energy prices could dent demand, global appetite for grains and oilseeds is unlikely to be a limiting factor for seaborne volumes between now and the end of the year. Instead, demand for seaborne transportation will be mostly driven by supply-side factors.
Shipments from Black Sea region are likely to remain under pressure as a Ukrainian proposal for a suspension of attacks on vessels carrying agricultural commodities was rejected by Russia in recent days. The result is that attacks against vessels and port infrastructure are likely to continue and could intensify, putting further pressure on exports from Ukraine and Russia. This will affect global wheat supplies in particular, as Ukraine and Russia are among the world’s largest exporters, as well as corn and barley. So far in August, seaborne grain exports from the Black Sea are nearly 50 per cent lower than a year ago, according to data from Signal Ocean.
The move by the Indian government to allow wheat exports could ease some of the strain on wheat supplies. The question is how much Indian wheat will find its way to the global marketplace, and how fast. Last time major exports were allowed, India’s wheat accounted for around three per cent of global supplies. Another aspect to consider in relation to Indian wheat exports is the geography. While India is relatively well-positioned to supply the traditional buyers of wheat from the Black Sea region in the Eastern Mediterranean, geopolitical tensions may force cargoes to take the long way around Africa amid risks to shipping in the Red Sea, adding considerable tonne-mile demand as a result.
Finally, the direction of relations between the US and China may also have an impact on volumes in the coming months. A meeting between the US and Chinese presidents in Washington, scheduled for late September, could affect Chinese imports of US soybeans and other grains. A fragile trade truce that has developed in recent months could come under renewed pressure as the US seeks to isolate Iran economically through sanctions on its trading partners, potentially limiting the prospects for any major US-China trade deal.
All in all, the outlook for the seaborne grains and oilseeds trade for the remainder of the year is uncertain. Against a backdrop of a strong first half, driven by Chinese imports, one could be forgiven for being somewhat pessimistic about the prospects for the grains and oilseeds trade. However, prices look set to remain elevated amid a combination of supply disruptions and solid demand. While downward pressure on available supplies may weigh on demand for seaborne transport and freight rates in the small and mid-sized segments, geopolitical tensions usually drive sub-optimal trade flows, which would provide some offset for lower volumes through longer voyages.
Data source: Ocean Analytics