LIVE MARKETS-Iran war could ignite new agricultural bull cycle
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IRAN WAR COULD IGNITE NEW AGRICULTURAL BULL CYCLE
Agricultural commodity markets have yet to fully price in the fallout from the Iran conflict, and a deepening nitrogen fertilizer crisis could trigger a new bull cycle in grains if the war extends into the second half of 2026, according to Bank of America.
Analysts Daryna Kovalska and Francisco Blanch note that urea prices have surged 30–40% across regions since Operation Epic Fury began, reflecting risks to 65–70% of global supplies — a disruption broader in scale than the 2022 fertilizer crisis.
Energy pass-through via transportation costs, which account for 20–40% of final landed prices, has already contributed gains of up to 5% across other agricultural markets.
The bigger moves may still be ahead. Fertilizers account for 30–35% of farm production costs, and grains are highly nitrogen-intensive.
Under a base case of the conflict extending into the second quarter, Bank of America sees corn up 20–30% on major production risks, wheat up 15–20% as the primary food security hedge, and soy oil with 5–10% upside through its link to the energy complex. Higher feed costs are seen lifting protein prices 6–8% in Brazil and 2–6% in the U.S.
Assuming Northern Hemisphere farmers have largely secured nitrogen for spring planting, there is roughly a six-month window before supply disruptions cause irreversible damage to the corn market, the analysts add, a window that maps directly onto Brazil's fertilizer procurement cycle ahead of October plantings.
Brazil is the world's largest urea importer, sourcing nearly half from the Persian Gulf, leaving it acutely exposed to a prolonged Strait of Hormuz shutdown.
Should the conflict run into H2 2026, which is not BofA’s current base case, agriculture prices could revisit 2022 highs, with corn facing the greatest upside risk.
(Karen Brettell)
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