Wheat Nears Two-Year High as Middle East Oil Shock Lifts Grain and Fertilizer Costs
Agricultural prices are climbing as Middle East tensions and reduced tanker traffic through the Strait of Hormuz push up energy, fertilizer and freight costs. Wheat is nearing a two-year high, while soybeans and corn diverge on demand, according to Anadolu Ajansı, WSJ and Agrolatam.
Oil shock spreads into grain and fertilizer markets
Agricultural commodity prices have climbed sharply as tensions in the Middle East and reduced tanker traffic through the Strait of Hormuz drive up energy, fertilizer and freight costs, according to Anadolu Ajansı. Following US and Israeli attacks on Iran on Feb. 28 and Tehran's retaliation, the conflict has disrupted supply chains and raised input costs across the farm production chain.
The S&P GSCI Agriculture benchmark index (SPGSAG) rose about 4.1% since the start of the conflict, climbing from 345.47 on Feb. 27 to 368.83 on March 27. Over the same period wheat gained 2.3%, corn 4.1% and rice 3.2% per bushel, while soybeans slipped 0.3%. Among soft commodities, sugar jumped 13.7%, cotton 7.3% and coffee 6% per pound, while cocoa fell 11.9% per ton.
Wheat nears two-year high
Wheat is approaching a two-year high as the impact of the oil price surge widens, according to the WSJ. Drought across key US growing regions including Kansas and Nebraska is weighing on wheat yields, Agrolatam reports, adding a supply-side factor on top of energy-driven cost pressure.
Fertilizer is the sharpest pressure point
Around 39% of the world's fertilizers transit the Strait of Hormuz, Anadolu Ajansı reports, citing Bahcesehir University economist Rahmi Incekara. Gulf states — Qatar, Iran, the UAE, Saudi Arabia and Bahrain — account for nearly half of global urea exports, while the route also carries 20% of diammonium phosphate, 10% of monoammonium phosphate, 25% of ammonia and 30% of sulfur. Incekara said the halt in shipments disrupted 38% of the world's nitrate-based fertilizer supply and 20% of phosphate-based supply. Australia, which sources more than 60% of its urea from the Middle East, could see stockpiles depleted by mid-April.
High nitrogen fertilizer costs could accelerate a shift toward crops that need less fertilizer, such as soybeans, at the expense of corn and wheat; investors expect US corn area to shrink and soybean area to expand. Selcuk University professor Zeki Bayramoglu described the current phase as the foundation for a "second-round shock in food prices" rather than an immediate spike.
Soybeans and corn split on demand
Agrolatam reports soybean futures rose to near two-year highs, with November contracts up 6 cents overnight and July futures above $12.10 per bushel, supported by tight supply, strong energy prices and biofuel demand. Soyoil has surged more than 50% this year on expectations of higher federal biofuel mandates. This differs from Anadolu Ajansı's reading of a 0.3% soybean decline over the conflict window. Corn exports are running strong, with US shipments up 31% year-over-year at 2.1 billion bushels so far in the 2025-26 marketing year.
Farmer confidence is weakening despite firm prices, Agrolatam reports, citing a Farm Futures survey pointing to trade and tariff worries. Soybean exports are down 24% from a year earlier, and rising input costs are squeezing margins even as commodity values rise.
