Raymond James reports that global grain markets are expected to tighten significantly in 2026, driven by lower crop yields, sustained demand, and constrained Black Sea export capacity. The most acute imbalance is in corn, with global consumption projected to exceed production by approximately 29 million tonnes in the 2026/27 season, marking the largest absolute supply-demand gap in 33 years.

Karen Braun, chief market analyst at Zaner Ag Hedge, highlighted after the latest USDA World Agricultural Supply and Demand Estimates report and the Pro Farmer crop tour that global corn supplies are tightening rapidly. The U.S. corn stocks-to-use ratio has dropped from 12.1% earlier this year to 9.7%, falling below the critical 10% threshold, indicating a further reduction in buffer stocks.

Meanwhile, U.S. corn production still faces downside risks. Since late summer, the condition rating for U.S. corn has declined by 11 percentage points, and some growing regions have experienced late-season heat stress. The USDA currently projects corn yields at 178.5 bushels per acre, but actual production figures remain uncertain.

Tightening supplies are already reflecting in prices. Since May 1, corn and wheat futures have each gained about 8%, while soybean futures have risen approximately 12%. Combined corn and wheat output from major exporting countries is expected to fall by around 84 million tonnes year-over-year, a reduction roughly equivalent to an entire year of U.S. corn exports.

Multiple variables will continue to shape the global grain supply outlook, including final U.S. harvests, Black Sea export capacity, and South American weather conditions. A potential strong El Nino event could impact the next South American growing season, while room for Brazilian soybean expansion is narrowing. The National Supply Company (CONAB) projects soybean planted area to grow by only 0.7%, one of the smallest increases in nearly two decades.

Heading into 2027, competition for arable land among different crops could intensify further. In 2026, combined U.S. corn and soybean planted area reached a record 183.5 million acres. However, as wheat planting profitability improves, some farmers may reconsider their crop mix next year, potentially adding further pressure to corn and soybean supply prospects.