RPT — ROI — What’s really behind the global grain rally?: Karen Braun

(Repeats Thursday's column to additional subscribers without any changes. S. farmers have just begun harvesting another huge corn crop, following last year’s bumper harvest. But that apparent abundance in the top corn exporter masks a considerably less comfortable picture of world grain supply.

Global corn consumption is forecast to exceed production by nearly 30 million metric tons in 2026/27. S. Department of Agriculture's (USDA) World Agricultural Supply and Demand Estimates released last Friday, the deficit would be the largest in more than three decades. Those supply concerns have already made an impression on prices.

Corn, wheat and soybean futures have risen significantly in recent months, with Chicago corn staging a record 16% rally in August alone, a time when prices are often under seasonal pressure. S. farmers are producing so much? Part of the answer lies elsewhere in the world, and even outside grains themselves.

S. farmers begin bringing in their second-largest corn crop on record. S. drought losses.

Although crop prospects have recently improved for some key wheat exporters, that has not erased the broader setback in exportable grain supplies. And beyond the major exporters, total world wheat production, like corn, is also expected to fall short of consumption in 2026/27. Export availability is another concern: combined Russian and Ukrainian wheat stocks are projected by the USDA to hit a 33-year high, as the war between the two leading suppliers continues to disrupt Black Sea trade. And the challenge may extend beyond this season.

Grains Losing The Acreage Battle Over the last quarter-century, the world's major agricultural exporters have dramatically expanded oilseed plantings, while grain acreage among key suppliers has stagnated. Harvested area across major oilseed and oilseed product exporters in 2026/27 is more than double its 2000/01 level. Major grain exporters have expanded acreage by just 5%. A closer look reveals that corn acreage has expanded substantially over that period, though wheat acres have contracted.

In other words, the acreage constraint is not uniform across grains, but the overall contrast with oilseeds is unmistakable. Yet grain demand continues to grow. Yield improvements have carried an enormous share of the burden, leaving less room for weather disappointments in years when grain acreage is relatively small. Oilseeds are on the other side of the coin.

Expanding acreage, particularly in Brazil, has been central to the explosion in global soybean production. But even there, acreage growth may be slowing. Brazil Hits The Brakes Brazil's statistics body, Conab, on Tuesday issued its first 2026/27 soybean outlook, forecasting yet another record crop in the world's leading exporter. But only fractionally so.

Brazilian farmers are expected to expand soybean plantings at the slowest rate in 20 years as weaker margins, expensive credit and fertilizer costs curb their appetite for more acres. Add in what experts say could be the strongest El Niño on record, which threatens yields in top-producing Mato Grosso, and Brazil could be unusually vulnerable to an output decline. The market isn't used to that. For years, it could count on Brazil adding substantial acreage almost regardless of what happened elsewhere, often diluting the impact of year-to-year yield swings.

The grain story extends to Brazil, too. Conab sharply raised its 2025/26 domestic corn consumption estimate on stronger ethanol demand, meaning less of the country's huge crop is available for export. Brazil is expected to harvest another record corn crop in 2026/27, but the demand shift is a reminder that bigger crops do not necessarily translate into equally large gains in exportable supply. Solvable In 2027?

None of this necessarily points to the kind of grain scarcity seen in 2012. S. still has a respectable corn supply buffer, Brazil remains capable of producing record crops and wheat is harvested around the world throughout the year. But the point still stands: global grain stocks are a lot less comfortable than a year ago, and the recent rally makes clear that markets have noticed.

S. farmers go big on corn and soybeans in 2026, pushing all-wheat plantings to a record low. Wheat prices have since recovered, and the competition for next year's acres is already heating up. S.

corn planting slightly trickier in 2027, just when the global balance sheet may need it most. (The views expressed here are those of Karen Braun, the Chief Market Analyst for Zaner Ag Hedge and former Reuters agricultural columnist. ) Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary.

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