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The heat that has swept the Iberian Peninsula in the past month has us all dreaming about vacation, imagining ourselves at a beachside bar eating paella, rather than processing the mass amount of news the market bombards us with every day. Let's try to make sense of the situation we find ourselves in today.
Globally, we have seen a continued decline in prices throughout 2025. Fears over the impact of the tariff war and the potential economic slowdown it may bring have weighed heavily on prices, as evidenced by the price of corn, which was trading at €242/ton in January but could be purchased just a few days ago for a new crop position at around €205/ton; it has even been possible to trade at around €210/t for all of 2026.
In the last few days we have seen prices rise, largely due to the strength shown by the dollar, the increase in freight rates (the cost of maritime shipping), and doubts concerning the wheat harvest in Russia, where the extreme heat during the spring and summer has cut crop forecasts. Even so, let's try not to dwell on the headlines and let's try to figure out whether we are facing a turnaround after so many bearish months or what is known as a dead cat bounce (a rise in the markets before going down again).
Spain: An exceptional harvest
First, let's focus a little bit on the local. In Spain this year we have had a very good harvest: between 22 and 24 million tons of cereals, depending on the source, which is about 4-6 million more than last year. We are talking about 9 million tons of wheat and 11 million tons of barley. The abundance of the harvest has generated a large supply in all production areas at cheap prices, at a time when the ports had little merchandise at more expensive prices, since it is an old harvest. The new wheat crop will not reach the ports until August, and the corn crop - with the delays in Brazil - may not reach Spanish ports until late August or early September.
To put it in context, according to the Spanish Confederation of Compound Animal Feed Manufacturers (CESFAC), feed production is expected to reach 29 million tons in 2025. This fact serves to explain that Spain is a cereal importing country: the national price is marked by the price at the ports and, therefore, by the international prices of goods and freight. In other words, even if we have a large harvest, the international situation will continue to determine local prices in the long term.
Global outlook: Bearish funds and rising world harvests
Globally, harvests are also expected to be better compared to last year: the wheat harvest is forecast at 808 million tons worldwide (compared to 799 million tons last year), and the corn harvest is expected at 1,263 million tons (compared to 1,225 million tons last year). However, end-of-season stocks are expected to be lower due to increased consumption. Even so, the overall crop performance is good. These good numbers have supported the short positions of the funds in the various futures markets. Having a “short” position means that the big fund managers are betting that prices are going to remain low. The problem? The problem is that the moment any bullish news comes out, when they go out to cover the shorts in Chicago or Matif, they contribute to the rise being greater. For the time being, they continue with the bearish bet, without reaching a record high.
Currency continues to play a key role in pricing: the ongoing depreciation of the dollar against the euro has led to lower prices at Spanish ports, especially for corn and soybeans. A clear example this year is soybeans: despite being a product with highly volatile prices, it has been trading at ports or crushing plants between €288–292/ton for weeks—levels not seen since 2017. The U.S. push for biodiesel, increasing the mandated use of soybean oil (among others), has driven up oilseed crushing to produce more oil, which in turn has boosted the supply of soybean meal, putting pressure on other origins. In Argentina, for example, crushing margins are negative, forcing some companies to halt production.
Otherwise, geopolitics continues to set the market's pace. A few days ago, Trump announced the imposition of 30% tariffs on Europe. It is not yet definitive: there is still time to negotiate until August 1, but the intensification of the trade war will bring downturns and fears on the stock markets, as well as a restructuring of distribution flows.
In short, the market remained dormant due to low trading activity, driven by weak consumption, with buyers holding off in hopes of further price drops before taking longer-term positions. Current price levels were largely taken for granted, supported by the abundant supply from the local harvest. Even so, the recent rise in wheat prices will likely limit any further decline in corn prices, which remain comparatively cheap. The exchange rate will need to be closely watched, but prices around €205/ton have proven reasonable for locking in positions through the end of the year.
Have a great summer!
