Global crop outlook diverges as drought cuts European harvests while South America posts record gains

Global agricultural production is becoming increasingly polarized as extreme weather reshapes crop prospects across major producing regions, according to the U.S. Department of Agriculture’s July World Agricultural Production report. While drought and record-breaking heat have sharply reduced corn production forecasts across parts of Europe and East Africa, favorable weather has boosted harvest expectations in Argentina, South Africa, Russia, and Canada, underscoring widening regional differences in crop performance.

The report illustrates how weather remains the dominant driver of global grain production, but also shows that farmers’ planting decisions are increasingly influenced by fertilizer prices, fuel costs, and changing crop economics. Higher production costs are prompting growers in several countries to reduce planted acreage or shift toward crops requiring lower input investments, adding another layer of uncertainty to global agricultural markets.

France suffers historic corn losses

Among the most significant revisions in the report is France’s corn crop, which USDA now forecasts at just 10 million metric tons for the 2026/27 marketing year. The estimate is 24% lower than last month’s forecast, 26% below last year’s harvest, and represents the country’s smallest corn crop since the 1990/91 season. Harvested area is expected to fall to its lowest level since 1969/70.

USDA attributes the decline primarily to an extended period of drought and record temperatures across Western Europe. Corn, which requires significant moisture during pollination, suffered severe stress during silking and tasseling, critical growth stages that coincided with prolonged heat exceeding 35 degrees Celsius. Unlike wheat and rapeseed, which had largely completed their reproductive development before the heat intensified, corn experienced irreversible yield losses. Satellite vegetation monitoring also confirmed deteriorating crop conditions across much of France.

Weather was not the only factor. Newly released data from France’s Agriculture Ministry prompted USDA to reduce harvested area by 190,000 hectares. Farmers curtailed corn planting because of elevated fertilizer and fuel costs, while some marginal land was left fallow or redirected toward silage production, which is excluded from USDA’s grain estimates.

The reduction has broader implications for European grain supplies. France normally accounts for roughly 22% of EU corn production, and drought has also reduced production prospects in Hungary and Slovakia. Although Romania and Bulgaria are expected to post improved harvests thanks to better rainfall than last year, overall EU corn production is projected to remain about 11% below its five-year average.

South America delivers another production boost

In contrast, South America continues to reinforce its position as one of the world’s most reliable grain suppliers.

Argentina is expected to harvest a record 63 million metric tons of corn in the 2025/26 season, following a record planted area of 8.2 million hectares. USDA said favorable weather throughout most of the growing season and a shift back toward earlier planting after the devastating chicharrita insect outbreak supported both yields and production. Dry weather later in the season had only limited impact because much of the crop had already passed its critical yield development stages.

Brazil also received upward revisions, although for different crops. USDA raised sorghum production to 6.2 million metric tons as expanding planted area offset slightly lower yields. Farmers increasingly selected sorghum because it offers lower production costs and greater drought tolerance than second-crop corn, making it more attractive amid elevated agricultural input prices.

Brazil’s cotton outlook also improved. Despite lower planted area than last year’s record season, exceptionally favorable growing conditions in Mato Grosso and Bahia are expected to produce record yields, allowing national cotton production to remain well above its five-year average.

Africa presents a mixed picture

African production forecasts reflect sharp contrasts between regions experiencing abundant rainfall and those suffering from drought.

South Africa is on track for a record 18 million metric ton corn harvest after strong La Niña rains produced excellent growing conditions throughout the season. Above-average soil moisture during grain filling and expanded harvested area contributed to one of the country’s largest yields on record.

Kenya faces the opposite situation. USDA lowered its 2026/27 corn forecast by one-third following an extended dry spell during June that caused widespread crop failures across key producing regions. The report also noted that elevated fertilizer prices reduced application rates, further weighing on production potential. If emerging El Niño conditions continue, additional losses remain possible before harvest.

The report illustrates how weather extremes and fertilizer affordability increasingly interact to determine crop outcomes, particularly in developing agricultural regions where growers have fewer options to offset adverse conditions.

Russia strengthens grain and oilseed production

Russia’s crop outlook remains relatively favorable despite reductions in spring grain acreage.

USDA increased its wheat forecast slightly to 88.5 million metric tons, supported by record winter wheat yields after abundant rainfall and moderate temperatures across major producing regions. Strong winter wheat performance has largely offset declines in spring wheat acreage caused by delayed planting.

The agency also expects Russia to harvest a record 20.7 million metric tons of sunflowerseed. Delays in planting spring grains encouraged growers to switch additional acreage into sunflower, which offers stronger profitability and a slightly later planting window. Harvested area is forecast to reach a record 12 million hectares.

The combination of strong wheat and oilseed production reinforces Russia’s position as one of the world’s largest agricultural exporters despite continuing weather-related variability across parts of the country.

Canada shifts acreage toward higher-value crops

Canadian farmers are also responding to changing market incentives.

USDA lowered its wheat production forecast to 34 million metric tons after official surveys showed growers planted less wheat than previously expected, replacing part of the acreage with canola and barley. Although planted area declined, improving moisture conditions across much of the Prairie provinces have supported favorable crop development.

At the same time, Canada is expected to maintain record rapeseed production as harvested area reaches an all-time high of 9.4 million hectares. USDA said expanding biofuel demand, growing domestic crushing capacity, and improved profitability encouraged farmers to plant more canola despite lower expected yields than last season.

Input costs continue influencing planting decisions

Beyond weather, USDA repeatedly identifies production costs as an increasingly important factor shaping global cropping patterns.

In France, high fertilizer and fuel prices contributed directly to lower corn acreage. In Kenya, expensive fertilizer reduced nutrient applications, worsening drought-related losses. Brazilian farmers expanded sorghum because it requires fewer inputs than corn, while Canadian producers shifted acreage toward more profitable oilseeds supported by expanding biofuel markets.

These developments suggest fertilizer economics are becoming an increasingly important determinant of global production alongside weather conditions.

Outlook for agricultural markets

USDA’s July assessment paints a picture of a global agricultural sector that remains highly resilient but increasingly uneven. Record production in several exporting countries is helping offset severe crop losses elsewhere, limiting larger declines in global grain output. At the same time, the report highlights growing regional disparities driven by climate extremes, changing planting economics, and persistent input cost pressures.

For fertilizer markets, the outlook remains mixed. Lower planted acreage and reduced fertilizer use in drought-affected regions could soften demand locally, while expanding oilseed production and record harvests in countries such as Argentina, Brazil, Russia, Canada, and South Africa are likely to sustain robust nutrient consumption in more favorable production areas. Together, these trends reinforce how weather and fertilizer economics are becoming increasingly intertwined in shaping global agricultural production.