Escalation of conflict around Iran could trigger rise in corn prices

Corn and soybean prices have stabilized in recent weeks after the sharp rise following the initial US strikes on Iran on February 28. However, further market dynamics this summer will largely depend on the duration of the conflict in the Middle East, notes Faith Parum, an economist with the American Farm Bureau Federation.

According to the US Department of Agriculture’s (USDA) Prospective Plantings report of March 31, corn acreage in the US in 2026 will total 95.3 million acres, down 3% from last year. Meanwhile, soybean acreage is expected to increase by 4% amid strong demand from the biofuels sector and lower production costs.

At the same time, ongoing instability in the Middle East could further shift soybean acreage. According to industry experts, countries exposed to supply disruptions in the Persian Gulf region account for approximately 49% of global urea exports and approximately 30% of ammonia. This is fueling concerns about fertilizer availability and leading to higher cost expectations ahead of the planting season.

Rising energy and fertilizer prices, coupled with uncertainty in trade flows and weather risks, are already supporting grain and oilseed prices. Corn prices reached $4.70 per bushel in early March, before falling by approximately $0.20. Soybeans previously rose to $12.13 per bushel, but have remained in the $11.50-$11.70 range in recent weeks.

Despite a record US corn harvest last season, prices remain relatively high due to robust global demand for feed and protein. An expected reduction in corn production this year could provide additional support. At the same time, rising production costs are putting pressure on producer margins, including in Brazil, where some farms are already operating at the margins of profitability.

Further price dynamics will depend on developments in the Middle East. If fertilizer supplies stabilize quickly, the current price increase could be temporary. However, if tensions persist, including potential disruptions to shipping through the Strait of Hormuz and restrictions on fertilizer exports, high costs could persist throughout the growing season and carry over into next year, leading to higher feed prices and increasing pressure on agricultural markets.

Tags: corn, prices, fertilizers