The close of the second quarter of 2026 underscores a landscape of transformation and volatility for the global commodities market. Amid geopolitical developments, persistent inflationary pressures, and the occurrence of severe weather events, players in the supply chain face the challenge of structuring their trading and hedging strategies for the coming quarter.
To help businesses navigate this unstable environment, Hedgepoint has prepared an overview of the key macroeconomic, energy, and agricultural factors that have shaped the business environment and will indicate price trends throughout the third quarter.
Read more detailed analyses in this article:
Macroeconomics and Energy: Inflation and Supply Volatility
Agricultural sector: the balance between demand and bumper crops
Soybeans: Biofuels and Support for Soybean Oil
Corn: U.S. demand vs. South American harvest
Wheat: Decline in U.S. winter wheat crops
Sugar: Record harvest in Brazil and risks in the Northern Hemisphere
Coffee: Volatility Amid Harvest Delays and Bearish Fundamentals
Cocoa: Climate Risks and Certified Inventories
The weather factor: El Niño at peak intensity on the radar
The current conflict between the U.S. and Iran caused global inflation to continue its upward trend in Q2. This persistence led major central banks—notably the Federal Reserve (Fed)—to adopt a restrictive monetary policy, driving the global appreciation of the dollar. Looking ahead to Q3, the prospect of stable or rising U.S. interest rates is likely to attract capital to the U.S. dollar, putting pressure on exchange rates in emerging economies, while the market assesses the direction of crude oil prices and investors’ risk appetite.
In the energy sector, the conflict’s repercussions have impacted supply: the decline in fuel availability has increased price volatility and led to declines in private and OECD inventories. The shortage of refined products and operational shutdowns at refineries have driven the crack spreads (refining margins) for gasoline and distillates to exceptional levels, keeping the sector under close scrutiny regarding the security of oil and Liquefied Natural Gas (LNG) supplies.
The progress made toward mandatory biodiesel blending targets in the United States provided consistent support for prices by stimulating domestic crushing. Additionally, the strength of crude oil prices throughout much of the quarter bolstered demand for soybean oil, driving up prices for this byproduct. In the coming months, the market’s focus will be on weather conditions during the U.S. crop season, the pace of Chinese purchases, and the finalization of the planted area in the U.S.
Strong demand, driven by domestic consumption and U.S. exports, was the main factor supporting prices on the Chicago Board of Trade (CBOT). Conversely, the influx of robust harvests from South America—with significant volumes in Brazil and Argentina—kept global supply high, limiting upward rallies in the international market.
Weak performance and quality losses in U.S. winter wheat crops have driven up prices. The market found additional support in the prospect of a decline in global production and a reduction in projected ending stocks for the 2026/27 crop year in major exporting countries.
The rapid pace of the 2026/27 harvest in Brazil’s Center-South region has pushed raw sugar prices to their lowest levels since 2020. However, climate risks threatening productivity in sugarcane fields across the Northern Hemisphere (including India, Thailand, Europe, and Central America) are beginning to establish a medium-term support floor, driving up the premium for white sugar on the international market.
The projection of a record harvest in Brazil acts as a bearish factor in the long term. In the short term, however, prices remain supported by operational delays in the Brazilian harvest caused by winter rains, low inventories in destination countries, and uncertainties associated with the impacts of El Niño on other producing regions.
Cocoa prices fluctuated sharply throughout the quarter. Warnings about the impacts of El Niño on the quality and volume of the 2026/27 harvest in West Africa (particularly in Côte d’Ivoire and Ghana) and in Ecuador are providing support to the market. On the other hand, the gradual recovery in exchange-certified stocks and the flow of shipments at Ivorian ports are limiting further price spikes.
The climate is emerging as the primary risk factor for agricultural commodity pricing in the second half of 2026. Official projections from NOAA and the IRI indicate probabilities of 97% and 98%, respectively, that the El Niño phenomenon will take hold between May and July, with the phenomenon projected to persist through the remainder of the year and into early 2027.
In addition to the confirmation of the event, attention is turning to its magnitude: models indicate a more than 66% chance that El Niño will reach the “very strong” intensity category between September and November 2026. This pattern could alter monsoon patterns and cause severe drought in key regions such as Australia, Southeast Asia, northern South America, and Central America. At the same time, it is likely to increase rainfall and the risk of flooding in southern South America and parts of Africa, as well as trigger a series of intense storms in the southern United States during the winter.
The volatility projected for the third quarter of 2026 requires that financial management and marketing decisions in agribusiness be based on technical analysis and up-to-date data intelligence. The interplay between global monetary policy, fluctuations in the energy sector, and climate shocks makes risk management essential to ensuring operational profitability.
To access the full quarterly report, including detailed charts, supply-and-demand balances, and in-depth analyses by commodity, visit the Hedgepoint HUBpage.