2026 has opened with a familiar driver dominating the headlines: geopolitics. Forget Russia, Venezuela or Greenland, developments in Iran arguably carry far greater implications for commodity markets. Iran is not only a significant producer of oil and fertilisers, but also a major wheat importer.
The protests currently unfolding are not without precedent. However, renewed threats of US intervention and renewed talk of regime change raise the risk of broader regional conflict, with multiple factions potentially vying for power.
On the data front, the USDA kicked off its 2026 balance sheets with a surprise. While most of the trade was positioned for a smaller US corn crop and tighter stocks, the USDA instead delivered higher yield and acreage estimates. The result was an effective 6mmt increase in US corn production and ending stocks. Globally, corn production was lifted by 12mmt, with China accounting for the other half of the increase.
US winter wheat area was also nudged higher, coming in just under 33 million acres versus expectations of 32.4 million. While above trade estimates, the figure still reflects the longer term decline in US wheat plantings. These acreage numbers could become increasingly important should dryness across the US southern plains persist.
The USDA itself is facing uncertainty. The funding extension put in place after last year’s government shutdown expires at the end of the month. With Trump and the US Federal Reserve now openly at odds and Congress appearing sidelined, the risk of another shutdown is growing. If the USDA is shuttered again, it would coincide with critical South American crop development periods, leaving traders without key benchmark data.
Oilseeds received a lift on the back of robust Chinese demand for US soybeans, with purchases now approaching the 12mmt import target negotiated under the Trump administration. The US is also believed to be moving closer to finalising Renewable Fuel Standards, which will set mandates for the volume of renewable fuels blended into domestic fuel supplies.
Elsewhere, canola found support after high level Canadian delegations met with Chinese officials, raising hopes that the long running anti dumping tariff dispute may be resolved. Palm oil prices also moved higher as Indonesia considered introducing an export levy to secure domestic supply for its proposed B50 biodiesel mandate.
Next week…..
The wheat market is going to be watching an Arctic blast that is set to settle over central Russia and parts of Ukraine next week. With temperatures tipped to dip to -20°C, any areas not protected by adequate snow depth could be at risk of winterkill. While global wheat supplies remain on the heavy side, any perceived risk to this year’s crop will be priced accordingly.
This weeks commentary is more about macro-economics and geopolitics that anything directly wheat oriented. Having climbed to over 0.70USc, the AUD has tipped over in
The final harvest reports are in, with further updates likely to offer minimal changes. Western Australia has received the promised bumper crop, while receivals on
The global canola trade had another significant shift last week with China reducing tariffs on Canadian canola. The response in the Canadian markets was strongly
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Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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New Year, old themes
The protests currently unfolding are not without precedent. However, renewed threats of US intervention and renewed talk of regime change raise the risk of broader regional conflict, with multiple factions potentially vying for power.
On the data front, the USDA kicked off its 2026 balance sheets with a surprise. While most of the trade was positioned for a smaller US corn crop and tighter stocks, the USDA instead delivered higher yield and acreage estimates. The result was an effective 6mmt increase in US corn production and ending stocks. Globally, corn production was lifted by 12mmt, with China accounting for the other half of the increase.
US winter wheat area was also nudged higher, coming in just under 33 million acres versus expectations of 32.4 million. While above trade estimates, the figure still reflects the longer term decline in US wheat plantings. These acreage numbers could become increasingly important should dryness across the US southern plains persist.
The USDA itself is facing uncertainty. The funding extension put in place after last year’s government shutdown expires at the end of the month. With Trump and the US Federal Reserve now openly at odds and Congress appearing sidelined, the risk of another shutdown is growing. If the USDA is shuttered again, it would coincide with critical South American crop development periods, leaving traders without key benchmark data.
Oilseeds received a lift on the back of robust Chinese demand for US soybeans, with purchases now approaching the 12mmt import target negotiated under the Trump administration. The US is also believed to be moving closer to finalising Renewable Fuel Standards, which will set mandates for the volume of renewable fuels blended into domestic fuel supplies.
Elsewhere, canola found support after high level Canadian delegations met with Chinese officials, raising hopes that the long running anti dumping tariff dispute may be resolved. Palm oil prices also moved higher as Indonesia considered introducing an export levy to secure domestic supply for its proposed B50 biodiesel mandate.
Next week…..
The wheat market is going to be watching an Arctic blast that is set to settle over central Russia and parts of Ukraine next week. With temperatures tipped to dip to -20°C, any areas not protected by adequate snow depth could be at risk of winterkill. While global wheat supplies remain on the heavy side, any perceived risk to this year’s crop will be priced accordingly.
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Data sources: Reuters, USDA, Bloomberg, Next Level Grain Marketing, Mecardo
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Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
MEET THE TEAM
Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.