IGC warns war with Iran already affecting global agricultural supply chains

The International Grains Council (IGC) warned on March 19 that a prolonged war between the United States, Israel, and Iran could have significant impacts on global agricultural supply chains. Recent shipping disruptions through the Strait of Hormuz due to the conflict have already driven sharp increases in fertilizer and fuel prices.

The Strait of Hormuz, connecting the Persian Gulf to the Arabian Sea, serves as the maritime exit for roughly 25% of the world’s oil and 20% of liquefied natural gas exports. The region is also a key hub for fertilizer production and trade, accounting for up to 35% of global urea exports and around 30% of ammonia shipments.

IGC noted that most Northern Hemisphere grain and oilseed producers are sufficiently covered heading into the spring planting season. However, a prolonged crisis could affect planting decisions later in the year, particularly in parts of Asia and Africa that rely heavily on Gulf fertilizer supplies. Disruptions may also lead to adjustments in fertilizer application rates, potentially impacting yields and crop quality.

The conflict has also highlighted regional food security vulnerabilities. On average, about 2 million tonnes of grain, oilseeds, and related products are shipped monthly to the Persian Gulf through the Strait of Hormuz. While local reserves provide a short-term buffer, supply challenges could worsen if disruptions extend beyond a few months.

IGC’s monthly report projects a 2% drop in coarse grains and wheat production in the 2026–27 marketing year due to reductions in harvested area and yields. Global consumption is expected to rise for the fourth consecutive year, from 2.415 billion to 2.440 billion tonnes, which will reduce carryover stocks by 3.5% to 609 million tonnes.

Soybean production in the 2025/26 marketing year is expected to remain largely stable, with only minor changes compared to the previous year. However, the 2026–27 crop is forecast to increase by more than 3% to a record 442 million tonnes, matching projected consumption. The IGC Grains and Oilseeds Price Index (GOI) rose 1% from the previous month, led by nearly a 6% increase in wheat. Year-on-year, the overall index is up 3.2%, with soybeans (+9%) and barley (+4.4%) seeing the largest gains, while the rice price index fell 3% from the previous month and 14% from 2025–26.

Tags: Iran, grain, soybean, wheat, logistics, war