Iranian agriculture supplier Brazil braces for higher costs, shipping disruptions

Major Iranian agriculture suppliers Brazil and Argentina will face short-term setbacks of rising input costs, shipping disruptions and market accessibility issues from the escalating Middle East conflict, but market sources expect minimal impact to domestic prices for their corn, soybean and other food commodities.

Iran sourced nearly 95% of its 4.9 million mt of corn imports from Brazil from July 1, 2024, to June 16, according to S&P Global Commodities at Sea data.

The flows to Iran represented 14.3% of Brazil’s corn exports over the past 10 years, according to Geraldo Isoldi, agricultural futures specialist at Terra Investimentos. In 2024, Iran bought 11% of Brazil’s corn exports to be the third-biggest importer.

Iran sourced 1.3 million mt of its 1.4 million mt in soybean imports from Brazil from July 1, 2024, to June 15, CAS data showed.

Similarly, Iran relied on Brazil for 933,351 mt of its 1 million mt of soybean meal imports during the same period, with another 116,115 mt coming from Argentina, CAS data showed.

“We still believe this conflict will be resolved quickly, so we expect minimal impact on domestic prices,” Isoldi said. “In addition, local demand here in Brazil is expected to remain very strong, mainly due to the growing corn ethanol industry.”

The expanding Israel-Iran conflict has raised uncertainties around key shipping routes in the region, particularly the Strait of Hormuz. Marine insurers have doubled war risk premiums for ships operating in the Persian Gulf.

“It will probably get more difficult to reach the Iranian market, which is important for our corn and soybean meal,” said Daniele Siqueira, market analyst at AgRural.

Domestic corn prices to remain “strong”

While Brazil’s national supply company Conab projects domestic corn demand at a record of nearly 90 million mt, the estimates could rise up to 92, Isoldi continued, adding that corn price expectations for the domestic market in the second half of the year remain strong.

Platts, part of S&P Global Commodity Insights, assessed Brazil corn FOB Santos for August loading at $205.7/mt June 20, stable from $206.09/mt on June 13, when the Israel launched airstrikes on Iran.

The assessment considered the premium for FOB Santos August-loading cargoes unchanged at plus 97 cents/bushel to Chicago Board of Trade September (U) corn futures, based on offers for H1 August loading heard at U plus 108 cents/bu and no bids heard at the market close.

The June 20 assessment was $8.57/mt above the year-ago price of $197.13/mt.

Another factor that could push input costs higher is the potential rise in the cost of urea, with Brazil importing a significant bulk from the Gulf countries.

“While most of these (Gulf) countries have export routes that avoid the Strait of Hormuz, freight rates in the region have already risen and are likely to rise further,” Isoldi said.

“This will undoubtedly affect Brazilian farmers’ planting decisions for the 2025-26 crop, which begins in the second half of the year – the extent depending on how long the conflict lasts,” Isoldi added.

The US Department of Agriculture projects Brazil’s MY 2025-26 (March-February) corn production at 131 million mt, up 1 million mt compared to the previous season, according to the World Agricultural Supply and Demand Estimates report June 12.

Similarly, Brazil’s MY 2025-26 (February-January) soybean output is projected at a record 175 million mt, up 3.55% on year, USDA data showed.

“Higher input costs – whether from urea or other products tied to oil prices – could eventually make soybeans more attractive than full-season corn,” Isoldi said.

Argentina expects little damage on low stakes

Argentine exports to Iran are irregular and subject to higher statistical secrecy, said Guido D’Angelo, senior economist at the Rosario Board of Trade.

“These exports are primarily explained by soybean meal purchases from that destination,” D’Angelo said. “With nearly 450,000 tons exported in 2024, Argentina supplied 15% of Iran’s soybean meal imports.”

Argentina’s MY 2025-26 (March-February) soybean meal output is projected at 33.54 million mt, up about 1% year over year, while exports are seen rising 1.7% year over year to 30 million mt, according to the USDA.

In contrast, Israel is a strategic destination for Argentine meat exports under the Mercosur-Israel free trade agreement. In 2024, Israel was the second-largest destination for Argentine meat supplies, exceeding 45,000 mt or nearly 7.8% of the total outflows, D’Angelo said.

“With exports to Iran amounting to less than US$200 million in the last two years, a potential disruption would not have a major direct impact on Argentine foreign trade, considering the importance of other trading partners,” D’Angelo said.

Any potential upward pressure on prices may arise only from the increasing price of urea, and the rising crude oil prices, said Javier Preciado Patiño, agronomist and former undersecretary of agricultural markets at Argentina’s Ministry of Agriculture.

In the last week, urea prices in Argentina jumped noticeably, with a significant bulk coming from imports and about 1.2 million mt to 1.3 million mt from domestic production, Patiño added.

“Beyond this, the indirect effects of this conflict are perhaps the most profound and dangerous for the global economy in general and for the Argentine economy in particular, whether they arise from disruptions in supply chains or shocks related to oil prices,” D’Angelo said.

Tags: Iran, corn, Brazil, soybean meal