Markets ponder geopolitical tensions

By Mathew Trewin
16^th June 2025

Weather patterns across the east coast seem to have returned to more normal conditions, which will be a welcome relief for most growers. In the north, a reprieve from the wet weather has helped farmers to get back out onto paddocks and to complete sowing chick peas, among the last of the winter crops to go in. Further south, some welcome rainfall has been a saviour for crops looking for a drink and to enable sowing programs to be completed. Decent rainfall has also been recorded in Victoria, where drought conditions have kept a tension on local prices. The more certain conditions are also starting to flow through into markets as growers review their selling strategies.  All eyes are on opportunities for old crop still held in storage. More tonnes have been held for longer this year creating uncertainty as we enter the northern hemisphere harvest period. Harvest in the black sea region is only weeks away and these origins are looking for and finding demand in markets in our region due to a price discount to Australian wheat. Stocks still held will be competing with these origins in coming months and week. Last week the June 2025 USDA World Agricultural Supply and Demand Estimates (WASDE) report was released,  projecting global wheat production for 2025/26 at a record 808.5 million tonnes, up from 799.7 million in 2024/25. Of note from the report was U.S. wheat exports, which are forecast at 820 million bushels, slightly above May’s estimate. The report also noted that markets have been supported due to some weather-related concerns in key production areas.  

Despite this, market sentiment remains cautious amid geopolitical and weather uncertainties. Time will tell on what will happen with the escalating conflict between Israel and Iran, with oil markets experiencing the most volatility to date. While Iran and Israel are not big buyers of commodities, there could be potential impacts on fuel prices and supply chains with markets starting to factor these prices in. Meanwhile in canola, markets rallied with the U.S. Environmental Protection Agency proposing a significant increase in biomass-based diesel volumes—from 3.35 billion gallons in 2025 to 5.61 billion in 2026. announcement has already driven soybean oil futures higher. The mandate reinforces canola’s role in renewable diesel and sustainable aviation fuel markets, shoring up demand in the United States potentially increasing opportunities for Canada and Australia. It is important to note, that the mandate is still a proposal. the EPA will open a public comment period, allowing stakeholders—including farmers, biofuel producers, and environmental groups—to provide feedback. After reviewing comments, the EPA may revise the rule before issuing a final version