Source: Ukragroconsult (Ukraine)
Middle East war threatens agricultural margins across the global sector. Specifically, the global agricultural sector may face a decline in profitability in 2026 due to the escalation of conflict in the Middle East, according to a research paper by economists Gary Schnittkey, Nick Paulson, Jim Baltz of the University of Illinois, and Karl Zulaf of Ohio State University.
The authors note that the military action against Iran, which began on February 28, 2026, with the participation of the United States and Israel, has already caused a sharp rise in energy and fertilizer prices. Furthermore, while the impact on agricultural markets is less clear, the overall increase in costs is creating additional pressure on farmers. Consequently, this could reduce their margins.
Commodity Price Volatility and Energy Costs
According to the study, corn and soybean prices increased after the conflict began. However, they fell sharply in mid-March. In particular, corn futures for December 2026 delivery rose from $4.69 to $4.90 per bushel. Meanwhile, soybeans rose to $11.68 but then fell to around $11.21 amid geopolitical uncertainty and a possible reduction in exports to China.
At the same time, the energy market remains a key influencing factor. Furthermore, since the start of the conflict, oil prices have risen from approximately $67 to over $90 per barrel. Additionally, this has already led to an increase in diesel fuel prices for US farmers, reaching $3.90 per gallon. Moreover, further increases in oil prices could push prices above $4.50.
Middle East War Threatens Agricultural Margins: Input Cost Pressures
Despite the relatively small share of fuel in agricultural production costs, its price increase has a multiplier effect. Furthermore, costs for transportation, fertilizer production, and crop protection products are rising. Consequently, this could trigger a new wave of inflation in the agricultural sector.
The authors pay special attention to the fertilizer market. Moreover, the Middle East accounts for approximately 10% of global urea production, so any disruptions in gas or product supplies immediately impact prices. Additionally, since the end of February, urea prices in the US have risen from under $500 to over $650 per ton. Meanwhile, anhydrous ammonia prices have exceeded $900.
At the same time, a significant number of farmers have already purchased or locked in input prices for the 2026 planting campaign. Therefore, the short-term impact may be limited. However, those farms that have not yet purchased nitrogen fertilizers will be forced to pay higher prices. Furthermore, they may even revise their cropping patterns, favoring soybeans over corn.
The future impact of the conflict will depend on its duration and the consequences for global energy flows, particularly through the Strait of Hormuz. In the long term, continued high energy prices could lead to sustained cost increases across the agricultural chain. Consequently, this may reduce profitability of corn and soybean production.
