Commodity Crop Sector Outlook for Harvest 2025

High Costs, Negative Margins and Trump’s tariffs mean cash retention is going to be king.

The modern global food system is underpinned by huge international trade; as production and consumption grow, so does the trade of crop and livestock products between countries and continents. An estimated 20% of all calories consumed globally cross at least one border during the supply chain. It is far too early to see the impact of Trump’s tariffs on global commodity markets, but with over half of US soybeans going to China – there is likely to be some serious disruption looking forward.

The ongoing assessment of supply (both stocks and future production) and demand are directly linked to price movements seen throughout the year. A small number of countries are responsible for the bulk of export trade and hence their harvest results have an outsized impact on the wider market. Global wheat production in the 2024/25 year was 797 million tonnes, up from a 10 year average of 768 million tonnes; of this China produced 18% (140 MT), India 14% (113 MT), Russia 10% (82 MT) and the US 7% (54 MT).

For the 2025/26 year, what level of production is currently being forecast for Central and Eastern Europe’s biggest exporters? In Russia, sowing and initial crop development of winter crops was hindered by dry soils and appeared to be underdeveloped and of poor-quality heading into the winter period, followed by thinning snow cover, increasing the risk of frost and ice damage and winterkill. Warmer conditions in late winter saw crops emerge in a more satisfactory condition and climate conditions are now expected to improve for spring sowing. Russia’s Agriculture Ministry is yet to officially declare a forecast, but the Russian Agricultural Bank expects a total grain harvest of  around 130 million metric tonnes (MT), with a reported 600,000 additional hectares of land cultivated this year. Of this total, wheat production is forecast to be between 80 MT (FAO) and 82.5 MT (SovEcon & IKAR); below the 5-year average of 83.5 MT. However, following heavy hail and snow storms in recent days, history would tell us that a 30% grain volume decrease between now and harvest is not inconceivable.

Neighbouring Ukraine, despite the war, has seen crop growth and weather conditions much the same as Russia, with a water deficit throughout autumn and winter, lack of snow cover and freezing conditions. Precipitation dropped by 32% between November and January compared to the long-term average. Ukraine’s productive area and harvest have been under greater observation since the start of Russia’s invasion. Between 2021 and 2022 harvests, wheat production fell by 35%, owing to infrastructure damage, displacement of farm employees and major trade route disruption. The cropped area has somewhat rebounded since 2022, with 5.24 million hectares of winter grains cultivated for 2025 and a further 5.7 million hectares expected for spring grains. Wheat was predicted to reach 25 MT but is now expected to be closer to 23 MT owing to the aforementioned weather impacts. The table below shows the USDA figures from previous Ukraine wheat harvests and COCEREAL projections for 2025.

Romania was deeply affected by drought in 2024 (6.5 MT corn compared to 12 MT in a “normal” year), with many farmers reportedly reviewing their crop rotations, resulting in a record planted area of oilseed rape (900,000 hectares) and a rise in winter barley. Spring crops were initially not thought to be so important for 2025, yet it appears that the recent higher rainfall and warmer temperatures are a lifeline to replace areas of winter crops that suffered from lack of moisture in late autumn and through the winter. Bulgaria, equally affected by drought, heat and adverse weather, saw very mixed results from the 2024 harvest: the smallest corn and oilseed crops in a decade alongside a record barley yield and strong wheat yields (circa 6.8 MT harvested). Much of this grain was held back in store as global supply grew and prices fell, whilst consumption consequently rose as a replacement to corn for feed and industrial uses. With a similar push towards winter sown cereals and oilseeds as Romania, and with yields expected to improve from 2024, this year’s production is forecast to be back to more normal levels. Irrigation of crops is increasingly becoming a necessity in this part of Europe, yet there are serious challenges with the cost and scale of infrastructure improvements still required.

Poland is forecast to have a fairly static level of production; although 2024 did not see detrimental weather effects, the harvest came as the earliest on record for many areas after high spring temperatures. Germany is expecting to see an increase of around 15% in its wheat crops to 21.36 MT according to the German Raiffeisen Federation, owing to yield recovery following a rain damaged crop in 2024. Oilseed rape is set to reduce by approximately 5% as the planted area decreased. A similar situation can be seen in France, the EU’s largest grain producer, with 2024 seeing the smallest soft-wheat crop since 1980. A larger area and higher yields may see total wheat production grow by 21% year on year. Across the EU-27, COCEREAL’s latest 2025 assessment pegs all crops up on last year with soft-wheat production at 124 MT (up 9% y/y), corn at 63 MT (up 8% y/y), barley at 51 MT (up 2% y/y) with oilseed rape at 19 MT (up 12% y/y).

On the whole, European harvest prospects look much more promising from a yield perspective but the all important April-June period still in front of us.  Climate events are becoming ever more unpredictable, as the Copernicus Climate Change Service (C3S) graphic shows, with both driest to wettest precipitation records broken across Europe in March 2025.

Looking further afield, the USDA’s March World Agricultural Supply and Demand Estimates (WASDE) cites higher wheat production from Australia and Argentina’s recent harvests. Meanwhile, the US is projected to have almost 1 million additional acres in wheat production in 2025 compared to the previous year, but the average harvest-to-plant ratio actually puts total production in line with 2024. China, aiming to become more self-sufficient and food secure, is seeing its wheat area and yield increase to record levels each year; total grain production targets are set to 700 MT for 2025, up by a significant 50 MT on 2024, as stock piling plans and grain pricing mechanisms take shape. Lastly, India, where the wheat harvest is currently ongoing, are projecting a record crop of 115.4 MT, up by 2% on the previous year.

So, we can tentatively assume that the supply side in 2025/26 is going to be around 75 MT (3.3%) higher than in 2024/25, of which wheat will be up 10 MT (1.2%). But how does this fit within the context of global stocks and demand estimates – particularly in the context of Trump’s tariffs? The table below shows the WASDE wheat ending stocks for the last five marketing years for the world and then major exporters.

Ending stocks for the 2024/25 marketing year of 260.08 MT have risen from a lower February estimate of 257.56 MT, yet this would still be the lowest ending stock since 2015, perhaps giving some evidence that with a supply side event somewhere, prices may move upwards.

In terms of demand, this has been steadily rising year on year due to all the factors often quoted such as population growth, changing dietary habits and rising meat consumption. Supply has generally kept in step with demand in recent years, but a current demand of 806.65 MT puts it marginally ahead of production at 797.23 MT, hence the fall in stocks.

The Stocks-to-Use ratio (evaluating the percentage of demand serviced by existing stocks) has been reducing annually, having been as high as 40% in 2020 and now sitting nearer 32%. A drop in the Stocks-to-Use would see prices rise, especially with demand expected to hold, but the improved production estimates for the 2025 harvest appear – so far - to be restraining any market improvements.

Wheat prices have been gradually falling since the huge spike seen in 2022 after Russia’s invasion of Ukraine, when US prices peaked at $12.94 per bushel and in the UK at £361 per tonne. Presently, these are closer to between $5.50 to $6.50/Bu and £165 to £180/t, respectively, with Paris milling wheat at around €210 to €230 per tonne. Despite the significant drop since the 2022 peak, current prices are not dissimilar to the 10-year averages of $5.98/Bu in the US and £171/t in the UK.

However - and this is the key point - costs of production have risen very significantly in the meantime.  In truth, net margins seen on farm have fluctuated hugely since 2022 due to inflation and yield, as well as geopolitical uncertainty. With elevated prices, reasonable yields and a low cost structure, 2022 saw many farmers have one of their most profitable years and in some places - for example, Brazil – their best year ever. What followed in 2023 was a sharp drop in commodity prices, whilst the costs of fertiliser and fuel rocketed, resulting in a total reversal of the previous year. As described, 2024 was a mixed year in yield terms, with a halt in the sharp rise in input prices and marginal gain in commodity prices; for many, this was a break-even year at best. The figures below are representative of a 1,000 hectare combinable crop business in Poland over this period, with actual results for 2023 and 2024, and budgeted figures for 2025.

The figures above paint a fairly bleak outlook for a three year period including the current year. Even if prices were to rise modestly, the sustained higher direct costs, growing labour costs (and constraints) and interest rates are projecting a loss-making harvest once more. Interest rates were forecast to have come down yet have remained high, and now the sector as a whole, but particularly the US, has to deal with the fallout of Trump’s tariffs. The knock-on effects of this are hard to evaluate; exports previously destined for China will be placed elsewhere on global markets.

Under these circumstances it’s hard to see anything but a continuation of the sharp decline in investments as a result of rising interest rates and lack of liquidity to re-invest. Research by Rabobank anticipates machinery to be most affected by US tariffs, based on the volume of exports to the US (particularly German-made tractors) and strong US competition. Europe’s agricultural machinery industry is worth some €119.5bn but the market size shrank by 1.3% per annum between 2019 and 2024. Inventories have been at an all-time high since 2022 on both sides of the Atlantic, with manufacturing and employment taking a hit and European tractor registrations hitting a 10-year low in 2024, down by a full 20% less than in 2021.

In summary, the focus for Europe’s farmers in 2025 is going to be on whole business cash retention as crop Net Margins remain in negative territory for many. For those farming good soils in areas of adequate rainfall with little or no debt, a breakeven year may be possible. For the rest it will be another negative net margin year. In practice, this is going to mean relentless cost management, improved efficiencies where possible and affordable and the complete cessation of investment activities. Without any unforeseen shocks in supply resulting from weather or warfare (trade or otherwise), there seems to be an ongoing pessimism relating to commodity crop markets in 2025/26. Clearly, this is not a sustainable model for farm businesses throughout Europe and elsewhere and an upward market price shift will be necessary if we are not to see supply contracting over the medium and longer term.

To find out more information, please contact Tim Adams at tim.adams@brown-co.com or +44(0)7920 792258.