Large harvests do not guarantee a global grain surplus — Karen Braun

Despite expectations for another season of strong global grain harvests, the world market is entering the MY 2026/27 with a steadily shrinking supply cushion. This was highlighted by Reuters analyst Karen Braun in her analysis of USDA’s July WASDE report. In her view, the key issue is not only how much grain is produced, but whether production is keeping pace with steadily growing global demand.

According to USDA estimates, global wheat and corn production in 2026/27 will remain above long-term averages. However, the supply-demand balance is gradually tightening. While global wheat production exceeded consumption by 2.3% in 2025/26, world wheat consumption is projected to exceed production by 0.8% in the new season. The corn outlook is even tighter: after a nearly balanced market last season, global corn production is expected to fall 1.8% short of demand, marking the largest production deficit in 16 years.

Karen Braun notes that expanding grain production is becoming increasingly difficult. Farmers are shifting toward oilseed crops, which offer stronger profitability, while high fertilizer costs, weather uncertainty, and challenging farm economics discourage additional wheat planting. As a result, grain acreage is declining across many major exporting countries.

In the United States, wheat acreage for the 2026/27 season has fallen to its lowest level since official records began in 1919 as farmers continue shifting to corn and soybeans. Similar trends are evident in Russia, where record sunflower seed and rapeseed acreage is replacing wheat, in Canada, where rapeseed plantings reached a record while wheat acreage declined to a four-year low, and in the European Union, where land is also shifting from grains to oilseed crops. In Australia, wheat acreage is expected to fall to a seven-year low because of extremely dry planting conditions.

A shrinking production cushion means that even localized weather problems can quickly affect global markets. Braun points to France as a recent example, where drought could reduce corn production to its lowest level in nearly 50 years. At the same time, exporters such as the United States can redirect trade flows to offset production shortfalls in specific regions.

Braun also stresses the importance of distinguishing between production risks and logistical risks. She notes that disruptions to Ukrainian grain exports in previous years were eventually mitigated through alternative export routes. Likewise, the current disruptions to Russian grain shipping may primarily affect logistics rather than result in actual production losses.

As the global production cushion continues to shrink, production risks are becoming increasingly important for price formation. While logistical disruptions can often be overcome over time, replacing lost production is far more difficult, making weather conditions and crop acreage decisions key drivers of the global grain market in the coming years.

Tags: margin, restrictions, crop forecast, corn, export, barley, wheat