Main points
- The war in the Middle East has caused a sharp increase in the prices of agricultural commodities, including vegetable oils, wheat, and corn.
- Rising energy prices and the blockade of the Strait of Hormuz increase the risks of supply disruptions, which stimulates demand for vegetable oils and corn.
Prices for agricultural products are rising / Photo Unsplash
The escalation of the war in the Middle East has triggered a sharp increase in the prices of agricultural goods on world markets. Vegetable oils have risen the most, and wheat and corn prices have also gone up.
The cost of most agricultural products has jumped due to the war in Iran
Global agricultural prices have surged amid the escalating war in the Middle East, Bloomberg reports. Palm oil is up about 10%, soybean oil continues to surge, and wheat is nearing its highest level in nearly two years.
One reason is the rise in energy and fertilizer prices, as well as the risk of supply disruptions to global agricultural markets. The disruption of crude oil supplies due to the conflict increases the attractiveness of biofuels produced from agricultural raw materials. This, in turn, stimulates demand for vegetable oils and corn.
An additional factor is the virtual blockade of the Strait of Hormuz, a key route for global fertilizer trade. This has caused prices for plant nutrients to skyrocket as farmers try to secure the necessary resources in advance. In addition, against the backdrop of the war, some countries may begin to build up food stocks, particularly wheat.
Which goods have increased in price the most?
Palm oil posted its biggest gain since 2022, when Indonesia, the top producer, temporarily suspended exports. Meanwhile, soybean oil futures in Chicago, a major alternative to palm oil, rose about 5% and are up for an 11th straight day, their longest streak since 2008.
Wheat prices rose more than 3% after their biggest jump since 2024 late last week. Corn prices also rose more than 2%, while soybeans continued to rise.
According to Joe Davis, director of brokerage firm Futures International, at the beginning of the week, agricultural markets largely react to the situation in energy markets.
He noted that further escalation of the war against Iran could increase the impact of macroeconomic and energy factors on agricultural product prices.
Chinese exchanges also saw vegetable oil and meal prices rise on Monday. In particular, soybean meal futures on the Dalian Commodity Exchange rose to 3,066 yuan per ton, up about 6%. Palm oil also hit its daily limit, while rapeseed oil and meal rose on the Zhengzhou exchange.
What are the price forecasts for the near future?
The rapid rise in crude oil prices has raised concerns about accelerating global inflation, further impacting financial and commodity markets.
According to Davis, consumers in the United States could quickly feel this through rising fuel prices and, eventually, food prices if high transportation and fertilizer costs persist.
At the same time, most farmers have already locked in prices or purchased key inputs for 2026. However, the next season could become more difficult if the Strait of Hormuz remains blocked.
As noted by Paramalingam Supramaniam, director of Malaysian brokerage Pelindung Bestari Sdn, demand for palm oil for biofuel production is growing again amid changes in the price ratios between gas oil and soybean oil.
World wheat prices rise: weather and US war against Iran push prices up
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Wheat prices have risen due to drought in the US and the escalating situation with Iran, which has led to speculative demand.
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March wheat futures rose on leading exchanges, and prices in Ukraine rose, but further growth may be limited due to rising sea freight costs.