Agricultural commodities are experiencing significant price surges as the conflict in the Middle East intensifies. Palm oil prices rose as much as 10 per cent, while soybean oil jumped, and wheat neared a two-year peak. The ongoing war has driven up energy and fertiliser costs, creating concerns about tightening supplies across agricultural markets.
The conflict’s disruptions to crude oil supplies are boosting the attractiveness of crop-based biofuels, subsequently increasing demand for vegetable oils and corn. The potential closure of the Strait of Hormuz, a critical route for fertiliser trade, has triggered a spike in crop nutrient prices as farmers rush to secure supplies. Further, wartime concerns about food security could prompt some nations to stockpile essential commodities such as wheat.
Palm oil saw its most significant jump since Indonesia temporarily halted exports in 2022. Chicago futures for soybean oil, the closest substitute for palm oil, rose as much as 5 per cent, marking an 11-day increase and heading towards the longest streak of gains since 2008. Wheat futures also rallied more than 3 per cent, following Friday’s significant jump, while corn climbed over 2 per cent, and soybeans also experienced gains.
According to Joe Davis, director at Futures International, “Grain and oilseed markets are following energy in early Monday trading.” He added, “The macro and energy markets will continue to lead ag commodities on any escalation of the war on Iran.” The spiking crude prices have stoked fears of faster inflation globally, rattling broader markets. Futures International is a brokerage that provides insights and trading solutions in the commodities market. They assist clients in navigating market volatility and risk management.
