Rising freight risks, tightening fertilizer markets and uncertainty around Middle East shipping routes could push global grain prices higher, even as many traders still frame the Hormuz crisis as a demand-negative shock, Andrey Sizov, managing director of Black Sea grain consultancy SovEcon, told Miller Magazine.

Andrey Sizov
Managing director of SovEcon

In an interview with Miller Magazine, Andrey Sizov said the market may be placing too little weight on how higher energy and fertilizer costs could spill into the next crop cycle, even as relatively resilient demand and cautious buyer coverage help limit downside risks for wheat.

Sizov said heightened chokepoint risk spanning the Red Sea and the Strait of Hormuz is complicating the usual price signals derived from harvest prospects. He added that many buyers across the MENA region remain in a wait-and-see mode during Ramadan, but that prolonged volatility in energy, freight and insurance could make hand-to-mouth procurement harder to sustain.

He also said Russian grain exports could prove more adaptable than some competing origins, reflecting years of operating under sanctions and elevated logistical risk. Sizov warned that higher gas prices and Gulf-related disruptions could translate into a significant cost squeeze for European and Ukrainian farmers, with potential implications for 2026 productivity. If oil were to move materially higher, he added, it could reinforce broader commodity buying as an inflation hedge, tightening spot market dynamics.

In the conversation below, Sizov discusses buyer sentiment, fertilizer risks, farmer selling behavior, and the key variables the market is watching amid the Hormuz crisis.

Mr. Sizov, the prevailing view has been that wheat is well supplied and prices should ease. You’ve challenged that, citing firm consumption, tighter exportable availability and rising geopolitical risk. In light of the Hormuz disruption, what do you think the market is missing about the current wheat fundamentals?

We were just talking about the idea that there is “a lot of grain in the world.” I’ve been saying for months that this is not really true. When you look at the futures markets and, importantly, at FOB markets, it seems I was closer to reality than those talking about very bearish scenarios like $200/mt Black Sea wheat or $5/bushel CBOT. That isn’t happening. We’ve just seen $6/bushel, and Black Sea offers are around $240/mt. So it looks like there isn’t as much grain available globally as many were suggesting.

DURATION IS THE KEY VARIABLE

We are seeing a dual-chokepoint crisis with both the Red Sea and the Strait of Hormuz under acute security stress. From a Black Sea standpoint, what is the realistic physical risk to Russian/Black Sea wheat flows in the coming weeks?

I think the trade will continue. Right now, we see a lot of narrative claiming that this Iran war is bearish for demand. Part of that is correct, because there can obviously be problems with deliveries into the Persian Gulf. But I think that narrative is overestimating the bearish side.

Demand is still there. Some countries are relatively well covered, so for them it isn’t such a big issue. Iran itself is an interesting case: it has been buying very aggressively for many months, especially from Russia, and I think Iran is well covered by now. If needed, Iran could also source through the Caspian route. So I don’t see a major demand collapse at this stage.

And we should remember another factor: it’s Ramadan, and trade activity is typically lower, which makes it harder to assess demand clearly. Are buyers nervous? I would say not really. It’s more of a wait-and-see approach. People want to see where futures and the broader market will move.

Also, many are already looking at the new crop. Egypt will start harvesting its domestic crop in a few months, and then other North African countries will follow. The overall outlook for new crop in the Black Sea, Turkey, and parts of North Africa like Morocco looks relatively good. That’s the bearish part of the story. But at the same time, markets don’t like sudden events. Importers had been relaxed for a long time and were buying hand-to-mouth. This kind of shock changes the psychology.

I’m not saying buying behavior is changing immediately but a lot depends on how long this lasts. There are basically two scenarios: a short-term episode (something like a June 2025-type analogy) or a longer conflict that causes bigger disruptions especially through higher crude prices and higher fertilizer prices.

We already see the narrative spreading about higher fertilizer prices. Current grain prices both old crop and new crop do not fully reflect that fertilizer dynamic. Those factors could still drive prices higher. They are already pushing them up. For example, if we look at Black Sea FOB, it’s a few dollars higher this week. It’s not a huge move yet, but it’s moving up.

So the idea that high freight and insurance costs will simply be pushed onto sellers and therefore make prices collapse that’s not what we are seeing right now. We also see Russian domestic bids in rubles gradually rising. That doesn’t match a strongly bearish-demand narrative. Again, the key variable is the duration of the war. But I don’t think it will have a substantial bearish impact on demand, which is relatively inelastic.

NO PANIC, BUT GROWING CAUTION

From your conversations with the trade, how would you characterize current buyer sentiment in wheat particularly across Asia and the MENA region? Are you seeing any signs of panic buying or stock-building?

Sizov: We spoke with several people in recent days. Everyone is monitoring the situation, but there is no panic, and Ramadan is also keeping activity muted. There is concern Egypt, for example, is very worried about the Egyptian pound, because a weaker currency makes imports more expensive locally.

I suspect many buyers are not fully covered until the new crop. Even with a generally good outlook, they still need to book some grain before new crop becomes available. That’s where the risk is. If we move toward crude at around $100, and if we see continued disruption of fertilizer flows, freight flows, and gas flows which is feedstock for nitrogen fertilizer out of the Gulf then buyers could start to get nervous. We may see that reaction this week or next week.

RUSSIA’S “RISK-ROUTING” ADVANTAGE

The Black Sea trade has already adapted to sanctions and previous escalations through alternative insurance. Is it possible that Russian grain flows might actually prove more resilient than European or American origins because of these established unconventional logistics?

Yes, that’s a very good observation, and I agree. Russia has more experience operating under high-risk scenarios. In some cases, vessels can move with limited insurance solutions or different structures.

There is also a geopolitical angle. In the Red Sea, the groups that sometimes attack vessels have tended not to target ships carrying Russian goods, because of Russia’s special relationship with Iran. It has happened occasionally, but as a rule it doesn’t. That could give Russia some advantage in riskier navigation corridors.

So yes overall, Russian export flows could be more resilient for several reasons: operational adaptation under sanctions, and the political risk profile on certain routes.

INPUT INFLATION AS A BULLISH DRIVER

You mentioned the recent rise in fertilizer prices. How could higher nitrogen costs translate into changes in planting decisions and yield potential for the 2026 crop particularly in Russia and Ukraine, and for wheat productivity in Europe? 

It’s a different story for Russia. Higher fertilizer prices could actually be beneficial for Russia from a hard-currency perspective, because Russia is a major exporter of nitrogen fertilizers. If Gulf suppliers face disruptions, that could support Russian export opportunities.

For Russia’s domestic farming sector, I think the impact on fertilizer application will be limited. Farmers are relatively well covered, and this shock is unlikely to materially change fertilizer use for the new Russian crop.

But for Europe and Ukraine, it’s more problematic. Europe suffered economically after the start of the Russia–Ukraine war, and now we’ve seen another spike in gas prices. Europe is a net importer of gas, which is a key input for nitrogen fertilizer. Ukraine is also dependent on imported inputs.

From what I’ve heard anecdotally some European farmers are not well covered on fertilizer, partly linked to regulatory pressures and cost structures. So if nitrogen prices rise and gas prices rise, that can be a significant shock. For European and Ukrainian farmers, fertilizer could become meaningfully more expensive for the new crop, and that can be a bullish driver.

And when we talk about new crop, it usually affects old crop too. I doubt we see new crop rally while old crop stays flat or falls. They tend to move together.

HEDGING NEW CROP ABOVE €200/MT

Do you expect the recent price strength to trigger a wave of producer selling, or will higher storage capacity and rising operating costs keep selling disciplined and delayed?

Slow farmer selling has been a big factor this season across the Black Sea, the EU and Australia. Farmers have expanded on-farm storage over recent decades cheap and efficient solutions like grain bags have helped.

Russia is a special case: Russian farmers are often in a weaker financial situation. Even if they want to hold grain, they may need to sell to meet obligations repay loans, fund spring planting, and so on.

Looking ahead, some disciplined farmers will hedge part of their new crop. We have been advising our clients to hedge part of new crop at prices above €200/mt, and they started doing that recently.

But farmers are not robots. If Chicago moves to 6.5, if MATIF rises further, and if Black Sea FOB moves toward $250/mt which is possible in a prolonged conflict then after selling some volume, many will likely switch back to a wait-and-see approach, hoping for even higher prices.

So in my view, it’s a good hedging opportunity for part of the crop but not all of it because if the shock continues, prices could still move substantially higher.

Beyond the physical market, the broader macro narrative matters too. If crude moves toward $100, global inflation expectations can rise, which tends to be supportive for commodities in general not only energy, but agriculture as well. That could become an important story in the coming months.

Finally, from your perspective, what are traders and buyers most likely misjudging right now?

Broadly, I don’t share the narrative that this is clearly a bearish event. You see comments often from a buyer perspective saying everything is fine, new crop is coming. If I were a buyer, I would say the same. But as an analyst, I think that narrative can be misleading. And remember: shocks do not move prices in a straight line. It can go up, then down, then up again. We’ve already seen that kind of pattern in crude.