Black Sea gridlock, a building El Niño and the US-China soybean gamble

in Commodity News 28/08/2026

Key takeaways:

• Ukrainian and Russian seaports handle 30% of global wheat exports, and deep-sea loadings at Odesa, Chornomorsk and Pivdennyi remain frozen after targeted strikes and elevated war risk.
• Russia’s Taman terminal was attacked on 30 July, and Kavkaz has recorded no shipments since 16 July, leaving Novorossiysk and Tuapse to account for 90% of Russian wheat exports.
• Kpler estimates Russian export capacity at 2 to 2.5 million tonnes a month excluding Kavkaz, against a theoretical ceiling of 4 million tonnes if every Azov installation ran flat out.
• 34 million tonnes of Black Sea wheat are due to move between July and December, and importers reliant on Ukraine or Russia for over 30% of their wheat have largely not shifted to alternative origins yet.
• Continued US soybean purchases from China suggest that China may meet its 25 Mt purchase commitment. However, little progress has been made on the separate promise to buy $17 billion of US agricultural products other than soybeans. US agricultural sales excluding soybeans are running at roughly $0.6 billion against the $1.4 billion monthly pace needed to meet the commitment.
• A strengthening El Niño threatens Australian wheat yields ahead of critical September rains and Brazilian soybean yields, with the 2015-16 analogue showing a sharp drop across states covering 29% of Brazil’s soybean output.

Black Sea flows are close to a standstill. Ukraine and Russia’s seaports account for 30% of global wheat exports — Russia has been the world’s largest wheat exporter in recent seasons — so disruption in the region is immediately visible on the flow side. In Ukraine, deep-sea loadings at Odesa, Chornomorsk and Pivdennyi (Yuzhny on Kpler) remain frozen, with shipowners, crews and terminal operators suspending operations after targeted strikes and elevated war risk. A small share of volume has moved to the Danube ports of Reni and Izmail, which carried a large share of Ukrainian exports after the UN-brokered Black Sea Grain Initiative collapsed in July 2023, but constrained draughts and limited vessel types mean those outlets cannot replace lost capacity.

Russia faces a similarly severe situation. Taman’s terminal was attacked on 30 July, and a wider safety perimeter at the Kerch Strait bridge means vessels cannot load at Kavkaz either. Kavkaz has recorded no shipments since the week ending 13 July. Novorossiysk, which is fed mainly by rail, is now the main functioning point, handling around 50% of exports versus 32% for Kavkaz and 8% for Taman, while Tuapse accounts for roughly 5%.

Even if vessels returned tomorrow, only two-thirds of terminals at Novorossiysk could resume quickly. Normal capacity of 6 million to 7 million tonnes will remain lower for the rest of the year regardless of a ceasefire. Storage is also adding pressure. Novorossiysk’s terminals hold under a million tonnes combined, versus 2.5 million tonnes exported monthly at peak. With nowhere to unload, domestic prices have fallen sharply at the very time they should be supported by export demand.

Ukraine is facing a similar overhang, with stocks above 6 million tonnes on a new crop and only limited overland relief through Romanian ports such as Constanta, the country’s main Black Sea gateway, which itself has no spare capacity during its own harvest peak.

Kpler still tracks a positive vessel lineup for the Black Sea, but most ships are now routing to Romania and Bulgaria instead, while a significant number remain anchored off Istanbul in the Sea of Marmara in the hope of a ceasefire.

Importers that rely on Ukraine or Russia for more than 30% of their wheat span North Africa, the Middle East and East Africa, and most have simply drawn on domestic stocks rather than rushing to alternative origins. The exceptions include Saudi Arabia’s unseasonal Romanian purchases and Jordan’s repeat tender, which is likely to be serviced from Eastern Europe.

The reluctance is mainly about price. The jump from Black Sea wheat to Argentine or Australian origin is significant, and the move to European wheat is larger still. Demand destruction is already shrinking global trade through July, August and likely September, echoing the 15 million tonne contraction seen in 2024-25. If disruption persists, lost volume will shift to Europe first, with spillover to Canadian, Australian and Argentine supply.

Choke points beyond the Black Sea, and a widening fertiliser gap

Gulf Cooperation Council countries have largely solved bulk grain imports by routing around the Strait of Hormuz. Iran remains the exception, still importing large quantities via Hormuz because Chabahar, plus limited Caspian volumes, cannot match the capacity or logistics of its main northern import point.

Fertiliser is in worse shape. Mideast Gulf exports spiked after last month’s ceasefire memorandum, but have since fallen back to patchy activity, and Saudi Arabia’s lifted Red Sea fertiliser exports remain roughly ten times smaller than what was lost via Hormuz.

That gap is visible in urea trade between India and Brazil. India rushed to buy urea through tenders at very high prices as the Gulf conflict began, crowding out supply from Egypt and Russia that would otherwise have gone to Brazil. Brazilian urea imports have dropped sharply over the last three months, just before the country needs nitrogen for its main soybean and corn crop — 180 million tonnes of soybeans and 26 million tonnes of corn — planted from late September. Brazil relies on imports for the bulk of its fertiliser supply, so current flows suggest a shortfall just before that window opens.

El Niño builds toward a September test

A strong El Niño — the periodic warming of the central and eastern tropical Pacific that shifts global rainfall and temperature patterns — has become more likely for the rest of the year. Eastern Australia and Southeast Asia face significantly lower precipitation from September to November, while western Australia is expected to see higher temperatures.

Australia’s wheat crop looks good so far on soil moisture, but the crop is made by September rain, and the long-term forecast for that month is significantly below average. Kpler’s yield estimate already sits below the market’s, assuming a full El Niño effect, and it will be revised weekly against actual rainfall.

In Brazil, Rio Grande do Sul tends to be wetter than normal in El Niño years, while the rest of the country, including top producer Mato Grosso, becomes hotter and drier. Kpler’s soybean view is below both the market and last year’s level, but the 2015-16 analogue — the closest comparable strong El Niño year — showed a much sharper drop across states covering 29% of Brazil’s soybean production. That downside is not yet fully reflected in the balance sheet.

Southern African corn imports, currently just over 2 million tonnes, have historically risen in strong El Niño years. India’s monsoon, now 12% below normal, matters less because the country has record wheat and rice stocks.

US-China trade: strong on soybeans, quiet elsewhere

Chinese demand for US soybeans remains firm, including a flash sale in the latest session, largely driven by tariff-exempt state buyers such as Sinograin, which manages China’s state grain reserves. A fourth auction of Chinese soybean reserves since July suggests room is being cleared for incoming US cargoes. Kpler now expects China to take 25 million tonnes of US soybeans under current relations, with US FOB values around $10 a tonne below Brazil keeping the trade competitive.

September to November alone typically accounts for at least 40% of the full export campaign, which risks front-loaded sales that leave the balance sheet tighter later, especially with 500 million to 600 million more bushels of crush demand this year on more favourable biofuel policy that supports soybean-oil demand for renewable diesel.

Elsewhere, the picture is much quieter. China’s $17 billion 2026 non-soybean agricultural commitment implies roughly $1.4 billion a month pro-rated from June to December, yet the latest US customs data excluding soybeans shows just under $0.6 billion, down about 4% from May.

China has bought no US corn or wheat and remains active only in sorghum. Recent wheat flows to China have been Canadian, corn has come from Argentina, and Brazilian safrinha supply — the corn planted after the soybean harvest — has also moved into the market. The 24 September Xi-Trump meeting is the key watchpoint: stronger purchasing could follow if the relationship holds, or demand could remain absent as it did for much of last year.

EU corn takes the heat, wheat and barley escape largely unscathed

Record average temperatures across Western Europe in June and July hit the bloc’s cereal crops unevenly. Wheat and barley, both winter-sown, were forced into an early finish, producing only small losses as earlier dryness accelerated maturity and harvest. Barley yields are close to the five-year average, and only a few million tonnes of wheat have been harvested so far.

Corn took the brunt of the heat, with temperatures coinciding with key yield development stages. The French crop — France is the EU’s largest corn producer — is currently about 50% through the dough stage, and upcoming rain is unlikely to offset the damage already done.

That shortfall is feeding stronger EU corn import demand on a more competitive wheat-corn feed spread. A softer Ukrainian presence in August is being offset by more US corn and the seasonal pickup of Brazilian safrinha supply, with buyers already positioning for a tighter balance sheet.

If Ukraine’s Black Sea access remains constrained, the 2022-23 pattern of Ukrainian corn moving overland into Romania before onward export could return, although that still depends on some Black Sea access to reach demand centres such as Spain, the EU’s largest corn importer, and the Netherlands.

Key watchpoints

• Whether Black Sea shipping resumes if a ceasefire holds, given that only two-thirds of Russian terminals could restart immediately.
• Australian rainfall through September, which will determine how much of Kpler’s below-market wheat yield estimate materialises.
• The 24 September Xi-Trump meeting, which will shape whether China’s non-soybean purchases close the gap to its $17 billion commitment.
• Whether Mideast Gulf fertiliser trade normalises, given that Red Sea alternatives remain roughly a tenth of the volume lost via Hormuz.

The Black Sea disruption has not yet been fully priced into wheat markets, and neither has the scale of El Niño’s potential hit to Brazilian soybeans. Both are still building, not resolving.

Source: Kpler