Business and Policy July 2025 – Cereals & Oilseeds

UK feed wheat futures attempt rebound amid geopolitical tensions and weather risks 

UK feed wheat futures (Nov-25) rallied by £5.15/t (+2.9%) for week ending 20th June, closing at £185.00/t and surpassing the 20-day moving average. While this marks a notable rebound, it remains too early to confirm a reversal of the broader downward trend that has persisted since January and indeed, since then, these earlier gains have proved fragile to the downside. Locally, old crop wheat for June movement has traded at £181/t and new crop for November movement at £192/t.   

Despite a broadly bearish backdrop and record short positions by speculative funds, the wheat price rally was driven primarily by escalating geopolitical tensions. The surge began following Israeli strikes on Iran and market nervousness has increased, allowing bullish fundamentals to exert more influence. 

Tensions in the Middle East are heightening concerns over global supply chains too, with the risk to critical energy and agricultural inputs rising. The Middle East region is responsible for almost a third of global crude oil exports and more than a third of global fertilizer exports.  

Due to the conflict, energy prices have surged more than 15% and are creating ripple effects across agricultural markets. Higher crude oil prices are supporting biofuel-linked crops such as soybeans, corn and rapeseed, while simultaneously elevating input costs including fuel, fertilizer and logistics, so squeezing production margins and raising the price floor required for sustainable crop production. 

In this increasingly risk-averse geopolitical climate, supportive news is gaining greater market traction. In the US, winter wheat crop conditions deteriorated in June with harvest delays adding to the upside pressure. Meanwhile, Russian wheat faces threats from lower spring wheat acreage and dry conditions affecting winter wheat. In France, a heatwave has been stressing wheat crops, further fuelling market concerns. 

For now, the market focus has shifted more toward these risks than the upcoming wave of cheaper Black Sea wheat exports from Romania, Bulgaria, Ukraine, and Russia, which pose direct competition for European wheat, including UK origins. Despite the rebound since tensions escalated, speculative funds have covered less than 10% of their short positions, leaving the market liable to further rallies driven by short coverings. 

Global supply tightens, but exportable stocks hold steady 

In its June report, the USDA further lowered global wheat ending stocks 4% below the five-year average and below market expectations. For maize, global production for 2025/26 was revised slightly upward, but a stronger increase in consumption pushed ending stocks down to 9% below the five-year average. Again, this fell short of trade estimates. Yet despite tightening global stocks, grain prices have not risen accordingly because the increase in production is concentrated in the major exporting countries. These key exporter stock levels remain stable and, in some instances, higher, so dampening price support.  

Consequently, world prices remain under pressure, particularly as Brazil, Russia and Romania received upgraded crop potential last week.  US crop conditions also improved, further easing supply concerns. 

UK market faces headwinds from biofuel uncertainty 

In the UK, concerns over domestic biofuel demand are compounding bearish pressure. The recent UK-US trade agreement has sparked fears of cheaper US ethanol imports undercutting domestic production. Plants such as Vivergo and Ensus face closure risks, which could increase the UK’s exportable wheat surplus and weigh on local prices. Uncertainty around ethanol demand therefore continues to cast a shadow over the domestic market outlook. 

Oilseeds market strengthens on energy-led support 

Oilseed prices rose across the board last week. Paris rapeseed futures (Nov-25) gained 2.5% to close at €512.00/t, while Chicago soybean oil futures (Dec-25) surged 7.6%. Brent crude closed up 3.8% on the week, the highest since late January amid renewed supply concerns, particularly regarding Iranian exports. Escalating conflict and US military involvement have also raised alarm over the security of the Strait of Hormuz, a vital global oil transit point. 

With biodiesel becoming increasingly competitive relative to conventional diesel due to rising crude prices, demand is expected to grow. As a result, rapeseed is benefiting from broader strength in the vegetable oil complex, due to its integral role in biodiesel production.

 

Mark Bowsher-Gibbs, mark.bowsher-gibbs@sac.co.uk ; 07385 399 513

£ per tonne	Basis	July ‘25	Nov’25	Mar ’26	Nov ‘26
Wheat	Ex farm Scot July. Nov.  Mar/Nov 26 Futures	180	190	191	197
Feed Barley	Ex farm Scot July. Nov.  Mar/Nov 26 Futures	160	170	166	172
Malting Barley	Ex farm Scot
Oilseed Rape	Del. Dundee July. Nov/Mar Paris Futures	415	433	435	418

Indicative grain prices 23rd June 2025 Source: SAC//United oilseeds/AHDB/Hectare)