The global grain market at a crossroads From deficit to surplus

The UN Food and Agriculture Organisation (FAO) is forecasting a strong grain harvest for the 2025/2026 agricultural year. As a result, the global grain market is once again shifting direction, with competition for export destinations intensifying. Whereas in 2022–2023 — at the outset of the Russia–Ukraine war, when export quotas and additional customs duties drove up bread prices — producers set the tone for market trends, the current struggle centres on finding and retaining buyers.

Under the impact of sanctions, the number of countries purchasing Russian wheat had fallen from 50 to around 30 by this autumn, leading to a marked decline in export volumes. Against this backdrop, Moscow has rejected Ankara’s proposal to revive the “grain deal.”

In its report published on November 7, the FAO noted that global grain production in the current agricultural season — including rice in milled equivalent — has increased by 4.4%, reaching a new record of 2.99 billion tonnes. Global grain consumption in the 2025–2026 season is expected to rise to 2.929 billion tonnes, an increase of 51.9 million tonnes, or 1.8%, compared with 2024–2025. This growth will be driven primarily by ample supply and falling grain prices.

Wheat trade volumes for the July–June period are projected to expand by 9.9 million tonnes, or 5.1%, relative to the previous season, largely due to stronger import demand in Asia.

Thus, against the backdrop of rising production this year and favourable forecasts for the next, global exchanges are expected to remain dominated by downward price trends. According to experts at the German news portal Agrarheute, the main pressure on grain prices stems from the exceptionally high global harvests of wheat and maize. At the same time, currency fluctuations and geopolitical developments are shaping grain sales prospects more strongly than at any time in recent years.

Analysts note that the euro–dollar exchange rate has been too weak to support higher wheat prices in Europe. Moreover, falling wheat prices are being recorded not only on European exchanges but also across many markets in both the Northern and Southern Hemispheres, driven in part by intensified harvesting in Australia, Argentina, and North America.

The current rise in global production of bread-making wheat, compared with the three preceding crisis years, is offsetting earlier deficit trends and helping to push prices down. Geopolitically, this abundance of wheat is reshaping the balance on regional grain markets in a meaningful way.

It is worth recalling that from late 2021 onwards Kazakhstan, India, and especially Russia began tightening export quotas and introducing additional customs charges and duties on the export of grain, fodder, feed additives, oilseeds, and various fertilisers. In Russia’s case, these measures were frequently employed as tools of political leverage, particularly amid the sanctions confrontation with the European Union. EU member states, by contrast, have been striving to diversify their sources of grain imports in order to reduce reliance on Russian suppliers.

However, last year, because of export quotas and a number of other restrictions, around 10 million tonnes of Russian wheat simply rotted in storage, as the country’s granaries lacked sufficient elevator capacity to store it according to technical standards. The situation has been even worse this year: according to data from the Russian Grain Union (RGU), Russian wheat exports June from 1 to 15 amounted to only 565,000 tonnes, whereas in the same period in 2024 external shipments reached 2.7 million tonnes. This represents an almost fivefold decline in Russian wheat exports.

The significant drop in what had previously been large export volumes from Russia is also linked to the disappearance of the former price discount on Russian wheat compared with European wheat.

Russia’s previously dominant position in the grain market is declining exponentially. According to data published by the RGU in November, Russian grain exports fell by a further 20% in October alone, with wheat exports declining by 14.2%. Meanwhile, the number of countries purchasing Russian wheat dropped from 50 to 30.

For example, Egypt, the largest buyer of Russian wheat, reduced its purchases by 16.3%, to 1.307 million tonnes. At the same time, Iran is shifting its focus to purchasing Kazakh grain — in 2024/2025 shipments from Kazakhstan increased eightfold, reaching 1 million tonnes.

Notably, relatively recently — in 2023 — Russia accounted for 81% of all wheat imports into Azerbaijan. However, over the past and current years, Azerbaijan has been increasing its wheat purchases from Kazakhstan as part of a supply diversification policy.

According to the national railway company Kazakhstan Temir Zholy (KTZ), in September–October 2024, exports of the new grain harvest to Azerbaijan reached 104,000 tonnes. In January–May 2025, Kazakh wheat accounted for 88% of all imported wheat. As of 26 November, KTZ had increased grain shipments to Azerbaijan 25-fold since the beginning of the year, transporting a total of 600,000 tonnes.

Under the current circumstances, as Russian grain producers lose their traditional positions in regional markets, Russia has little interest in strengthening competitors — especially those from Ukraine. Recently, on the sidelines of the G20 summit, Turkish President Recep Tayyip Erdoğan expressed his desire to discuss with Russian President Vladimir Putin the possibility of reviving the “grain corridor.”

This refers specifically to the agreement signed in Istanbul on July 22, 2022, which provided for the creation of a safe corridor for the export of grain from Ukrainian ports via the Black Sea, on the condition that Western restrictions on Russia’s food exports were lifted. However, following Russia’s withdrawal from the agreement, grain shipments from Ukrainian ports have not taken place over the past two years.

“The time for the grain deal has, in any case, passed. Of course, there is an understanding that effective, workable efforts are needed in the field of food security. However, the European Union, in practice, simply sabotaged the implementation of a whole series of understandings that would have helped to stabilise the situation on food markets and facilitate food supplies from Russia,” said Russian Deputy Foreign Minister Sergey Ryabkov recently, in response to a question about Turkish President Recep Tayyip Erdoğan’s statements regarding the intention to discuss the resumption of the grain corridor agreement.

So, how is the situation in Azerbaijan, a country that, for a number of objective reasons, still remains heavily dependent on imported food grains, amid the current shifts in global grain market trends? Azerbaijan is striving to reduce its dependence on global fluctuations in grain prices, which pose risks to the country’s food security.

The republic has long focused on expanding specialised and technologically equipped grain-producing farms, featuring efficient irrigation and high levels of commercial wheat production. By a series of presidential decrees, farms using modern irrigation systems are granted food subsidies. In turn, the Agrarian Credit and Development Agency (AKIA) has been authorised to provide state guarantees on loans and to subsidise interest on loans for the purchase of modern irrigation systems for wheat production.

These measures, combined with the organisation of grain sowing on demined lands in the Karabakh and East Zangezur economic regions, are helping to expand areas under grain cultivation. In the territories liberated from occupation, farms with modern irrigation systems received subsidies of 400 manats ($235), while those without such infrastructure were granted 140 manats ($82).

These efforts are yielding tangible results. According to data from the State Statistical Committee as of November 1 this year, Azerbaijan harvested 3,277,800 tonnes of cereals and pulses (including maize), an increase of 2.6% compared with the previous year.

Thanks to agronomic measures, efficient irrigation, and favourable weather, domestic farmers have, after a long period of decline in production, almost reached the record levels of 2018 and 2019, when the country harvested 3.3 and 3.4 million tonnes of cereals, respectively.