Grain Snippet: Russia–Ukraine Conflict Shakes Global Barley Markets
The Russia–Ukraine conflict has once again shaken cereal markets following Russia and Ukraine trading blows over shipping in the Sea of Azov and the Black Sea. As the Sea of Azov handles around one-quarter of Russia’s grain exports, the disruption on 10th of July has fuelled a sharp rally in wheat and corn futures. Local barley prices have followed the move more modestly, with South Australian and Victorian barley prices increasing by A$10/MT and A$3/MT, respectively.
Another key geopolitical risk for the global barley market is the renewed tensions between the US and Iran. Iran has threatened shipping through the Strait of Hormuz, prompting US military strikes after Iran breached the June 2026 Memorandum of Understanding. More recently, the Red Sea Strait has been disrupted after Houthi forces in Yemen imposed a blockade on Saudi-linked vessels. The Houthis claimed the blockade was in response to alleged Saudi attacks on Sana’a Airport, which were intended to prevent Iranian aircraft from landing. The Red-Sea Strait accounts for around 10–15% of global seaborne oil transport, raising concerns over delays to crude oil shipments. Since the renewed escalation between the US and Iran, US WTI August crude oil futures have risen by approximately US$13/barrel to US$82/barrel, while agricultural futures, such as corn, have also moved higher.
The USDA revised China’s 2025/26 barley imports higher to 12.5 MMT, the second-highest on record. The upward revision reflects stronger-than-expected import demand, supported by heavy rainfall during August last year that reduced the quality of parts of China’s corn crop and boosted demand for imported barley for blending. Looking ahead, strong Chinese import demand is expected to keep the Australian barley market firm, with 2026/27 barley imports forecast at 10.7 MMT. Although this is down 1.8 MMT year on year, imports remain above the 10-year average of 9.5 MMT.
Turning to the global feed grain production outlook, French 2026/27 corn crop conditions have deteriorated sharply, falling 43 percentage points over the past four weeks to 41% good-to-excellent (GD/EX), primarily due to recent heatwaves and dry weather. French 2026/27 spring barley conditions have also weakened, declining 13 percentage points over the same period to 55% GD/EX. This places crop ratings well below both last year’s level of 70% GD/EX and the five-year average of 68% GD/EX. Weather forecasts continue to point to dry conditions across key EU feed crop regions, which should keep the global feed grain market supported.
Across Australia’s barley-growing regions, soil moisture profiles remain broadly favourable following timely rainfall during May and June. Nevertheless, longer-term forecasts continue to indicate a strong El Niño signal, pointing to warmer and drier conditions from August through October. Despite this elevated weather risk, increased planted area, on the back of improved grower returns, is expected to partially offset seasonal production risks. The latest WASDE forecasts Australian barley production at 14.1 MMT in 2026/27, down 2.5 MMT year on year but still above the five-year average of 13.83 MMT.
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