Expensive fertilizers slow down grain production

There was no immediate sign of a crisis mood, such as in the energy markets, during the grain trading session yesterday. However, it's exciting to see what will happen next. The IGC warned yesterday that high fertilizer prices could impact yields and quality of grain. Besides the broader developments in commodity markets, the weather is also affecting the grain market. Drought in the US is now drawing attention. The May contract for wheat on the Matif closed €0.50 lower at €207 per tonne. On the CBot, wheat was on the rise, closing 3¾ cents higher at $6.08 per bushel. Corn was showing a stronger increase, up 6½ cents to $4.69¾ per bushel. Soybeans closed 6¾ cents higher at $11.68½ per bushel. The commodity markets remain turbulent due to the fighting in the Middle East. Israel bombed the South Pars gas field in Iran earlier this week, and in response, Iran carried out attacks on various oil processing facilities in countries around the Persian Gulf. Israeli Prime Minister Benjamin Netanyahu stated yesterday at a press conference that Israel conducted the attack on the gas field independently, without the knowledge of the Americans. Reuters had earlier reported that the action was conducted in consultation with the Americans. Trump has requested Israel not to carry out further attacks on energy infrastructure, according to Netanyahu. Shipping through the Strait of Hormuz has not come to a complete standstill despite Iran's blockade. The BBC reports, based on information from Kpler, that 99 ships have passed through the strait in March so far. That averages about 5 or 6 ships per day. Before the war, an average of 138 ships passed through the Strait of Hormuz each day, according to the Joint Maritime Information Centre. It is therefore not surprising that the International Energy Agency (IEA) is warning today of the largest energy crisis ever. The IEA is calling for fuel savings, including by working from home as much as possible and reducing the maximum speed limit. Fertilizers cannot be excludedThe Gulf States are also an important region for fertilizer production. The availability of fertilizers there is now also under pressure. The International Grains Council (IGC) expects that the consequences of this will be manageable in the northern hemisphere. At the start of the growing season, a significant portion of the fertilizers has already been secured by growers and traders, according to the IGC. In parts of Africa and Asia, the situation is different. Especially in countries that are heavily dependent on fertilizers from the Middle East, growers may start making different choices. In a broader sense, a prolonged disruption could lead to a reconsideration of fertilization quantities, with potential consequences for yield and crop quality, said the IGC. The total global grain harvest for the 2026/27 season is projected by the IGC to be 2,417 million tonnes, compared to 2,470 million tonnes in 2025/26. The total amount of grain available will shrink for the first time in four seasons, the IGC expects. The grain consumption for the 2026/27 season is estimated at 2,440 million tonnes, exceeding demand. The ending stock of grain for the 2025/26 season has been slightly adjusted upwards to 632 million tonnes. This is the largest ending stock in six years. Large price differencesSome American analysts note that wheat on the CBoT is rising too fast. This makes American wheat too expensive in the world market, they fear. There is little to no sign of that in the export figures. American wheat exports up to March 12 are 14% ahead of last year and 18% ahead of the five-year average. Drought is another point of concern for American growers. Compared to last week, it is mainly in the wheat belt where drought has extended. In the corn belt, rain has provided some relief, as we can see from the latest drought monitor. Relatively high fuel prices hurt when filling the tank, but are favorable for the demand for biofuels. This is something that corn and soybeans can especially benefit from in the coming time, as some experts expect. Particularly in the US, where there has already been a significant discussion about a higher blending percentage of ethanol in gasoline year-round, the debate is reigniting. Under Trump, the major oil companies saw an opportunity to weaken the blending of biofuels. Now that gasoline and diesel prices are high in America and consumers feel that in their wallets, this situation could change. The National Corn Growers Association calculated that a higher percentage of ethanol in gasoline could make it $0.10 to $0.30 per gallon (approximately €0.23 to €0.69 per liter) cheaper.