Middle East unrest pushes up grain prices

The global grain supply may be large enough to cover consumption, but if it cannot reach the users who need it, problems still arise. This realization dominated the market during the last trading session. Amid attacks involving Israel, the US and Iran, tensions in the Middle East are not easing. This has consequences for key shipping routes that are important not only for the global grain trade, but also for oil and products such as fertilizers. The March contract for wheat on the Matif closed yesterday €3.50 higher at €196.25 per tonne. On the CBoT, wheat was somewhat stronger and noted a gain of 16 cents, up 2.8% to $5.82¾ per bushel. Corn closed 9¾ cents higher at $4.41½ per bushel. Soybeans increased by 9¼ cents, ending up at $11.63¾ per bushel. Uncertainty is not good for market stability. If there's anything that brings uncertainty, it's the military actions in Iran and the surrounding region. International grain trading companies are increasingly worried about the consequences for shipping routes. Disruptions in international trade can quickly lead to shortages in certain regions. We saw this recently especially with oil and LNG, and according to some experts, it is not unthinkable that we will see this with grains as well. A war like the one currently in Iran has historically often been a driver for grain prices, even though it may not seem logical at first glance. In Europe and the US, the futures markets are already exploring the upper end of the range, and in Russia, the export price for wheat is nearing the highest level in six months according to several sources. Fertilizers are tight Qatar, Iran, and Saudi Arabia are important producers and exporters of fertilizers. Countries like India, China, Australia, and Indonesia are significantly dependent on fertilizers from the Middle East. The fact that there is a kink in the supply of fertilizers so reasonably early in the growing season may have repercussions later in the season. In the US, the wheat price received additional support due to drought in the key wheat regions. 56% of winter wheat in the US is now experiencing some level of drought. Last week it was still 50% and is the highest percentage since November 2024. Rain is forecasted for the upcoming weekend, but local sources state that this does not directly resolve the drought. In northern Brazil, rain is causing delays in the soybean harvest and the sowing of the follow-up crop corn. Various parties expressed concerns about the yield and quality of soybeans in Brazil due to the changeable weather. However, market bureau Agroconsult raised its yield forecast for Brazilian soybean harvest yesterday. The bureau adjusted this based on the results of their crop tour, which visited ten provinces. Compared to the previous estimate, the harvest has been increased by 850,000 tonnes to 183.1 million tonnes.