A healthy global grain harvest should inspire confidence in dairy farmers, but the picture is far from clear heading into the 2026/27 marketing year.
Argentina is harvesting a record corn crop; South Africa has produced a bumper crop; and exporters such as the US and Canada expect to ship more grain, recent US Department of Agriculture (USDA) data shows.
Ample supply in the key growing regions should support affordability – but the situation today isn’t quite so simple.
That’s because the global corn balance is tighter than the headline production numbers suggest.
The USDA forecasts world corn production at roughly 1.30 billion metric tonnes in 2026/27, but consumption is expected to exceed production. Global ending stocks are projected to fall from 299 million tonnes to 275 million tonnes, leaving the markets more exposed to trade and weather disruptions.
Regional supply imbalance creates pricing pressures
A key reason why more grain may not mean cheap prices is the supply imbalance globally.
For example, Argentina’s 2025/26 corn crop is estimated at a record 63 million tonnes, supported by record area and favourable yields.
South Africa is also reporting record production after strong seasonal rainfall.
But elsewhere, drought and extreme heat have sharply reduced production.
In Europe, France’s harvest has been severely impacted due to hot weather, resulting in a corn crop forecast of just 10 million tonnes – its lowest level since 1990/91.
In Africa, Kenya’s production prospects have also slipped following a prolonged dry spell.
These regional differences have a direct impact on local feed prices. Since grain must move from surplus areas to deficit areas, dairy farmers in grain-deficit regions may face rising corn costs, even if exporters elsewhere are handling record supplies.
The EU is a case in point. The continent’s lower domestic corn production has led the USDA to raise its import forecast by 3 million tonnes.
This additional demand from the EU could support export values and increased delivery prices due to stronger competition for available cargoes, since key exporters including Argentina, Ukraine and the US will compete for orders from the EU.
Local market dynamics may also move independently from futures markets, meaning producers may see little immediate benefit from lower futures prices if regional supply remains constrained. Conversely, in regions with abundant harvests, local prices may dip significantly even if international prices remain firm.
At the same time, global grain stocks (across all grains) remain relatively comfortable, but inventories held by major exporters are projected to fall 8.1% year-on-year to 156 million tonnes, suggesting less buffer against weather or trade disruptions despite another large harvest.
Energy markets add another layer of uncertainty
Biofuel production further complicates the bigger picture. A recent analysis from Purdue University suggests that elevated crude-oil and gasoline prices can boost ethanol margins and support US corn demand. While this is unlikely to undercut feed availability for livestock farmers, the dynamic may support price firmness thanks to a steady demand from ethanol plant buyers.
US biofuel policy, which ties the soybean market directly to energy goals, has an even stronger effect on soybean oil and crushing, which may lead to increased soymeal availability.
For dairy producers, the practical lesson is to avoid treating the concept of global grain supply as a complete feed-price forecast.
Instead, purchasing decisions should focus on local market dynamics, freight costs, currency exposure and alternative feed options alongside futures prices. At this point, buying strategies should prioritise meeting near-term grain requirements while retaining flexibility should prices decline later.
Crucially, buyers should compare alternative feeds – such as barley, sorghum, wheat, distillers grains and protein meals – on a delivered nutrient-cost basis rather than simply on price per tonne, to ensure they are purchasing the most cost-effective source of energy.
