Ontario wheat prices reached 52-week highs as the market incorporates a risk premium due to the uncertainty in production. Statistics Canada said Ontario farmers plan to increase corn acres by 5.4 per cent this spring; soybean acres will be similar to last year.

The world is no longer comfortable with past stock levels of grains and oilseeds. The ongoing Russia/Ukraine conflict, escalating tensions in the Middle East, and China’s heightened frustration over Taiwan have major importers increasing stocks for food security.

Quick look:

Soybeans: Ending stocks have been at historic lows in Ontario.

Corn: Ethanol plant bids have hit three-year highs.

Wheat: Ontario winter wheat planting in 2025 was down versus the previous year.

Soybeans

Ontario farmers plan to seed 2.9 million acres of soybeans this spring, unchanged from last year, according to Statistics Canada. Using an average yield of 50.6 bushels per acre, production has the potential to come in at four million tonnes, up from the 2025 output of 3.6 million tonnes. The year-over-year increase in production comes on the heels of historically low ending stocks in Ontario.

Commercial stocks in Ontario are declining, and the market will function to encourage imports moving forward. Bids from the domestic crusher in Ontario need to be $0.50-0.75 per bushel to higher to attract supplies from south of the border. Domestic crush margins are at three-year highs, so there is breathing room for stronger cash bids.

On the world market, Brazil’s soybean harvest progress has moved past the halfway mark. Argentine farmers will begin harvest in the latter half of March and move into high gear during April. Brazilian soybean offers in export position are US$50 per tonne discount to U.S. origin.

U.S. farmers are expected to increase soybean acres by four to five per cent this spring, according to the USDA. That increase may have influenced Ontario farmers rotational plans.

Soybean futures reached 18-month highs during the first week of March. While the futures markets surged, basis levels deteriorated. This was largely fund buying. As of March 10, we estimated that the non-commercial position in the soybean futures was near 250,000 contracts, which is a historical high. When the speculative trade is this large, the market tends to decrease.

This week, we’re advising farmers to increase sales by 10 per cent, bringing total sales to 80 per cent for the 2025 production. We’ll save the final 20 per cent increment until the upcoming crop is more certain. When we see Canadian imports from south of the border increase, this will be the top in the Ontario soybean market.

Corn

Ontario farmers plan to plant 2.3 million acres of corn this spring, Statistics Canada estimated. This is up from 2.2 million in 2025. Using a traditional abandonment rate and an average yield of 174.2 bushels per acre, production has potential to reach 10 million tonnes, up from the 2025 crop of 9.5 million tonnes. The higher corn acres come at the expense of lower canola and spring wheat acres. Farmers are clearly responding to market signals.

Bids from ethanol processors are reaching three-year highs. Buying interest from feedlots and elevators sourcing for the export market have not increased to the same extent. To reiterate from our previous issue, Ontario corn ending stocks are expected to drop to historical lows at the end of the 2025-26 crop year. The market is functioning to ration demand by trading at a premium to the world market.

Canadian crop year-to-date corn exports for the week ending March 1 were 398,100 tonnes, down from last year’s number of 1.2 million tonnes. Northern European feed grain markets continue to be saturated with domestic wheat supplies.

Despite the rally in the corn futures market, export offers have only risen by US$2-4 per tonne. U.S. corn FOB the Gulf was quoted at US$225 per tonne while Brazilian corn was valued at US$226 per tonne FOB Paranagua.

The seeding of Brazil’s safrinha corn crop is moving into the final stages. Total Brazilian corn production is expected to finish in the range of 130 million-132 million tonnes, down from the 2025 output of 136 million tonnes. Conditions are favourable in Brazil, but we’re still expecting drier conditions to develop due to ‘La Nina’. Argentine farmers have started harvesting their record corn crop, which is expected to reach 53 million tonnes, up from last year’s output of 50 million tonnes.

U.S. farmers are expected to seed 94 million acres of corn this spring, down from 98.8 million last year. Missouri, Nebraska, Illinois and Indiana are experiencing drier conditions heading into the spring seeding period. This is favourable for seeding, but timely rains will be needed or the corn market is moving significantly higher. The world cannot afford a problem with the U.S. corn crop.

This week, we’re advising farmers to increase sales by 10 per cent bringing total sales to 80 per cent for the 2025 production.

Wheat

Ontario farmers planted 1.12 million acres of winter wheat last fall, down 64,000 acres from the fall of 2024. We continue to project an Ontario winter wheat crop of 2.5 million tonnes, compared to last year’s output of 2.9 million tonnes.

Ontario farmers are only expected to plant 43,000 acres of spring wheat versus 62,800 acres last year. This is a modern-day historical low.

U.S. hard red winter wheat was offered at US$281 per tonne FOB the Gulf on Friday, while U.S. soft red winter was quoted at US$263 per tonne. French soft wheat was offered at US$245 per tonne FOB Rouen. Russian 12.5 per cent protein was quoted at US$250 per tonne FOB the Black Sea. Ontario soft red winter was quoted at US$265 per tonne FOB St Lawrence port.

Conditions in Russia have improved over the past month, and the crop will come out of dormancy in fair condition. We’re factoring in a minor year-over-year decrease in Russian and Ukrainian wheat production. The ongoing war will be a significant factor determining export potential.

In Europe, the winter wheat crop in the northern regions has come out of dormancy earlier than normal due to warmer temperatures. Conditions are drier in parts of Germany, Poland, Hungary and Czechia. European wheat production will be down from last year, but it’s hard to put a number on the crop size at this time.

The winter wheat crop in the U.S. southern Plains needs rain. There are major concerns in Oklahoma, Texas and southern regions of Kansas. If the seasonal April rains do not materialize, there is a serious problem with the hard red winter wheat.

This week, we’re advising farmers to sell 20 per cent bringing total wheat sales to 80-90 per cent. We need to be selling into this recent strength. The U.S. winter wheat crop will be down from last year, but once harvest begins the market will come under pressure.

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Some 20 per cent of the world’s oil and liquefied natural gas also transits the Strait, and its near closure, combined with missile and drone strikes across the Gulf, have forced regional energy facilities to halt output.

That has, in turn, shut fertilizer plants in the Gulf and beyond, just as farmers across the Northern Hemisphere prepare for spring planting, leaving little margin for delays.

The global market for urea was already struggling with tight supplies prior to the current conflict, with Europe forced to cut output due to the loss of cheap Russian gas and China restricting fertilizer exports, including urea, in order to ensure domestic supplies.

Which fertilizer plants have halted or cut output?

Qatar Energy has halted output at the world’s largest urea plant after shutting down gas output following attacks on its LNG facilities.

In India, a massive global urea market, three urea plants have cut output as LNG supplies from Qatar have plummeted.

India, home to nearly a fifth of the world’s population, buys more than 40 per cent of its urea and phosphatic fertilizers from the Middle East, and recently agreed to buy 1.3 million tons of urea, some of which might not arrive on time.

Bangladesh has shut four of its five fertilizer factories, while Australia’s Wesfarmers has warned of possible shipment delays, including for urea.

Egypt, which supplies eight per cent of globally traded urea, could struggle to produce nitrogen fertilizer after Israel declared force majeure on gas exports to the country, Scotiabank and Rabobank analysts say.

Brazil is almost 100 per cent reliant on urea imports — nearly half of which transits the Strait of Hormuz.

In the U.S., farmers are reporting sold out retailers, with the country about 25 per cent short of fertilizer supplies for this time of year.

Globally, urea exports are set to fall to about 1.5 million metric tons in March, compared to 3.5 million without China’s supplies, or 4.5 to 5 million with China, according to Scotiabank.

How has the conflict affected prices?

Urea export prices in the Middle East have jumped about 40 per cent to just above $700 per metric ton (C$958) on March 13 from just under $500 (C$685) before the war, according to Argus.

In the U.S., fertilizer prices have surged as much as 32 per cent since the conflict began.

Analysts say prices for nitrogen-based fertilizers like urea could roughly double if the war drags on.

Given the Middle East’s dominant market share, no producer can quickly make up for the lost supply, according to Chris Lawson, analyst at CRU.

Russia, the world’s largest fertilizer exporter, is facing supply disruptions due to Ukraine drone strikes, while China, despite ample capacity, is restricting exports, he said.

— Additional reporting by Gus Trompiz, Sybille de La Hamaide and Dewi Kurniawati

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Russia/Ukraine – The conflict moved through its third year with no end in sight. Attacks on grain handling facilities, difficulties shipping through the Black Sea and shifting production estimates out of both countries were followed closely by traders. 

Middle East – The Israeli war against Hamas in Gaza sparked wider disputes across the region. Resulting turmoil in energy markets was also felt in the grains and oilseeds, while trade through the Red Sea and Suez Canal was hampered.
 
Panama Canal – Low water levels at the Panama Canal created additional headaches for global grain movement in 2024, although that congestion eventually started to clear up.
 
Labour disputes – Labour unrest was a feature of the Canadian grain trade in 2024, with strikes and/or lockouts at both coasts and at both major railways.
 
China – China began an anti-dumping investigation into Canadian canola in the fall. The country remains the largest export customer heading into the New Year, but the threat of another trade dispute between the two countries remains ever present.

Trump – Trump’s new administration is bound to generate headlines through 2025, but his proposed policies were already riling up the ag markets ahead of his inauguration. Most notably, import tariffs and resulting retaliation could dramatically alter international trade flows.

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“Another 13 vessels were diverted this week taking the total cargo diverted away from the Red Sea route to around 5.2 million metric tons of grains in about 90 ships since the attacks started late last year,” said Ishan Bhanu, lead agricultural commodities analyst at data provider and analyst Kpler.

About 7 million tons per month of grain cargoes usually transit the Suez Canal into the Red Sea, but bulk and other shipping has dropped significantly as Iran-backed Houthi militants have continued attacks on shipping despite U.S.-led air strikes on Houthi positions in Yemen.

“U.S. and European cargoes continue to avoid the Red Sea,” Bhanu said. “Not a single vessel in the Atlantic carrying grain to Asia is heading towards the Suez Canal.”

The Atlantic shipments would include large U.S. grain exports to Asia.

“Almost all cargo originating in the Black Sea, mainly exports out of Russia and Romania, continues to travel through Suez and the Red Sea,” Bhanu said. “Only three such vessels diverted to take the longer route among dozens sailing.”

Vessels in the Red Sea broadcast messages on the automatic identification system (AIS) to seek safe passage to show they are not involved in the Middle East conflict, including ships under Chinese ownership, he said.

Commodity traders said it was still possible to find bulk carriers for Red Sea grain shipments.

“There are shipowners willing to take the risk,” a German grain trader said. “But it is clear the air strikes and naval forces are not enough to end the attacks on ships in the immediate future.”

–Reporting for Reuters by Michael Hogan.

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Contracts for corn, soybeans and the three major United States wheat varieties were all lower during the week, mostly stuck in an ongoing grind downwards. However, they were given some relief as corrective buying on Jan. 30 provided some much-needed strength.

Ryan Ettner of Allendale Inc. in McHenry, Ill. said there were still residual effects from the U.S. Department of Agriculture’s January monthly supply/demand estimates released on Jan. 12. In that report, corn and soybean production estimates were raised, causing a bearish reaction in the markets. Low export figures for U.S. wheat have also been pulling prices down.

“You have larger yield increases for corn and soybeans than expected and at the same time, exports were left alone (in the report),” he said. “I don’t know if exports have really dramatically slowed more than expected recently, but I think the bigger thing is we thought we were ahead of things.”

The U.S. Federal Reserve announced on Jan. 31 that its key interest rate will remain unchanged with the expectation of rate cuts later this year. However, both the Fed’s announcement and the ongoing tensions in the Middle East don’t seem to have any effect on prices, according to Ettner.

One aspect that could affect prices, however, is early harvest reports from South America. Any figures outside trade expectations could pull corn and soybean prices one way or another.

“If there’s any kind of disappointment from early harvest reports, that can make an impact,” Ettner said. But it’s a grind lower unless we hear news otherwise. It’s pretty much the lull we’re in until at least the end of February. Once you move to (multi-year) lows, that grind lower is going to slow down quite a bit. We would slowly pick up exports.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man. 

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Dmitry Medvedev, who served as president from 2008 to 2012 and is now deputy secretary of Russia’s security council, said he would like to outline “some simple but important points about food security in Russia,” given the sanctions imposed.

Most of them have been part of the country’s agricultural policy for years.

“We will only be supplying food and agriculture products to our friends,” Medvedev said on social media. “Fortunately we have plenty of them, and they are not in Europe or North America at all.”

Russia already supplies wheat mainly to Africa and the Middle East. The European Union and Ukraine are its main competitors in the wheat trade.

The priority in food supply is Russia’s domestic market and price control within it, Medvedev said. Russia has been using grain export quotas and taxes since 2021 to try to stabilize high domestic food inflation.

Agriculture supplies to “friends” will be both in roubles and their national currency in agreed proportion, Medvedev said.

Currency of payment can already vary in each grain export contract subject to the needs of buyers and sellers. However, Medvedev’s remark comes after Russia’s recent demand for foreign buyers to pay for Russian gas in roubles.

Russia banned most Western food imports in 2014 when it annexed Crimea from Ukraine but may expand the list further now, Medvedev added.

Many foreign companies, such as producers of chocolate, halted sales of their brands in Russia last month.

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Lionel Ector, president of Diefenbaker Spice and Pulse at Elbow, Sask., explained that a good Australian lentil harvest in December has filled the demand for the crop in India and as a result, more Canadian lentils are staying home.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) estimated this year’s crop at 633,900 tonnes.

The Australians “have really been the ones supplying the market with lower freight rates into the Indian subcontinent,” said Ector.

“We’re into that time frame where India will be harvesting soon. The processors within India and the market, they all consume their harvest before they start importing a bunch of Canadian or Australian lentils because they don’t have the storage or infrastructure for holding long-term inventory.”

An estimated 1.606 million tonnes of lentils were produced during the 2021-22 marketing year, according to Agriculture and Agri-Food Canada (AAFC).

Lentil prices have declined between two to nine cents per pound over the past month, according to Prairie Ag Hotwire data. Other price declines in Canada were seen in chickpeas (up to 18 cents/lb.) and peas (up to $1.50 per bushel) since the start of 2022.

Turkey’s lentil harvest in May can also affect the amount of Canadian exports going into the country, which would then be distributed across the Middle East, Ector said.

However, demand for lentils tends to increase during the Muslim holy month of Ramadan, which takes place from April 2 to May 2 this year. Adherents typically fast during daylight hours between a pre-dawn meal and a nightly feast.

“There should be some buying to help fill that need around that holiday,” he added.

North American weather will greatly affect how many lentils Canada grows this year, which in turn would affect worldwide demand. The early projection from AAFC predicted 2.5 million tonnes to be produced in 2022-23, but Ector is doubtful about that figure.

“We’re in an extreme drought. We have been in two years, some might say three. We’re going into spring with major dryness concerns and the market hasn’t really factored that into the pricing at this point in time,” he said. “Factor that in with demand, it’s really a weather market.”

AAFC’s next outlook for principal field crops is due out Feb. 18; Statistics Canada’s next report on stocks of principal field crops as of Dec. 31 is due out Feb. 8.

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

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The deal comes after a search by chairwoman Margarita Louis-Dreyfus for an investor to relieve debt built up to buy out other shareholders, and extends state-owned holding company ADQ’s foray into food commodities that are crucial to import-reliant Gulf states.

Along with Archer Daniels Midland, Bunge and Cargill, Dreyfus belongs to the ‘ABCD’ quartet of leading agricultural commodity traders.

The transaction price was not disclosed, but LDC’s press office said at least $800 million of the proceeds will go towards repaying a $1 billion loan LDC made to bail out Brazilian sugar firm Biosev, which is controlled by one of its holding firms (all figures US$).

The deal also includes a long-term supply agreement to sell agricultural commodities to the United Arab Emirates, the companies said.

Margarita Louis-Dreyfus, who took control of LDC in 2009 after the death of her husband Robert, had been seeking an investor after borrowing $1 billion from Credit Suisse to buy out minority family shareholders in early 2019 after acrimonious negotiations.

Her Akira family trust subsequently controlled more than 96 per cent of LDC’s holding company, which in turn owns about 95 per cent of LDC, with employees holding the remainder.

The shareholder tensions coincided with a period of lean profits in trading crops like cereals, leading LDC, like its rivals, to shift down the supply chain towards food processing.

Control

The ADQ deal relieves financial pressure on LDC and its chairwoman, while positioning it to capture Middle East demand, Jean-Francois Lambert, a consultant and former specialist commodity banker, said.

“LDC could become the champion of food and agri-supply in the Middle East,” he said.

Some traders were cautious about prospects for the partnership, given Louis-Dreyfus’ past wrangling with family members and as the Abu Dhabi investor was little known in commodity markets.

“The new shareholders might want some control, putting in their own people, which could create tension,” a European grain trader said.

The investor will obtain board seats and other shareholder rights in relation to the size of its stake, LDC’s press service said.

ADQ, established in 2018, has this year also agreed to acquire 50 per cent of agribusiness group Al Dahra Holdings and established Silal, a company to boost food supply.

In its first-half results, LDC declared equity of $4.5 billion as of June 30, down from $4.8 billion on Dec. 31.

But interim profits rose, with LDC pointing, like other merchants, to improved trading margins linked to price volatility and strong Chinese demand.

The deal is subject to closing conditions, including regulatory approvals, the companies said. Rothschild & Co advised ADQ while Credit Suisse advised LDC.

— Gus Trompiz reports on commodity markets for Reuters from Paris; additional reporting by Michael Hogan, Sudip Kar-Gupta, Soumyajit Saha and Davide Barbusia.

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The strike that killed Iran’s most prominent military commander put markets on edge and opened the door for a setback a day after most-active soybean and wheat contracts each hit 2018 highs, traders said. Wall Street’s major indexes also fell, while hog futures sank by their daily trading limit.

“When in doubt, get out,” said Jim Gerlach, president of commodities broker A/C Trading in Indiana.

The Chicago Board of Trade’s most-active soybean contract dropped 1.6 per cent to $9.41-1/2 a bushel (all figures US$). The decline came after the most-active contract on Thursday touched its highest price since June 2018.

Wheat slumped 0.9 per cent to $5.54-1/2 a bushel at the CBOT, after the most-active contract reached its highest price since August 2018 on Thursday. Corn slid 1.5 per cent to $3.86-1/2 a bushel.

Analysts said they expected the markets would soon shift their focus from tensions in the Middle East back to an initial U.S.-China trade deal and the release of U.S. Department of Agriculture (USDA) crop data next week.

“We’ve had a good run, and sometimes the markets are looking for an excuse and I think they found one,” Gerlach said.

Traders are waiting for USDA to issue crop production data on Jan. 10 amid uncertainty about the size of last year’s corn harvest, which was delayed by cold, wet weather. They also want to see how the agency adjusts forecasts for crop exports to China, after Washington and Beijing struck a Phase One trade agreement last month.

China committed to buying more U.S. farm products as part of the deal, although it has not been signed and details have not been announced. China, the world’s top soybean importer, slashed purchases of U.S. farm goods during the countries’ trade war and bought soy from South America instead.

USDA said total U.S. soybean export sales last week were 332,047 tonnes, below analysts’ expectations for 350,000 tonnes to 1.05 million tonnes. China bought 160,241 tonnes for 2019-20 delivery, including about 132,000 tonnes switched from unknown destinations.

Weekly U.S. corn export sales of 539,991 tonnes were within analysts’ estimates, while wheat sales of 333,250 tonnes were toward the low end of expectations.

There are “ideas the wheat market has run out of gas for the moment,” brokerage CHS Hedging said.

— Reporting for Reuters by Tom Polansek in Chicago; additional reporting by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.

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Over the last month, prices for large green lentils have jumped 25 per cent because of issues with pigeon peas, said Jubinville. Green lentils can be substituted for the pigeon peas.

“That crop is grown during the summer and that got off to a dry start,” he said. “The monsoons came late and now into the harvest season, the monsoon rains aren’t stopping.”

Just in the last few weeks, prices for large green lentils rose from 19-20 cents/lb. to 24-25 cents. “Once India starts buying, other buyers take note,” Jubinville said.

However, he saw any further upside to large green lentils being limited at the moment as the crop from the Black Sea region, especially Russia, is about to enter the global market.

The current situation in the Middle East, particularly with Turkey having invaded northern Syria, is cause for concern. Geopolitical uncertainty in the region, which consumes large amounts of lentils, could limit any further gains, he said.

Also, the Canadian harvest has been a difficult one this year with cold, wet conditions causing delays. In turn, that’s created concerns over the quality of Canadian-grown lentils, Jubinville said, noting later in the year there could be more upward movement.

— Glen Hallick reports for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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