While the immediate impact on wheat prices remains relatively limited, the Hormuz crisis is pushing up freight, fuel, insurance and fertilizer costs, adding a new layer of pressure to global trade. Benoît Fayaud of Expana warns that the bigger risk lies not in current wheat flows, but in shrinking farm margins, quality risks and weaker planting incentives that could weigh more heavily on the 2026/27 and especially 2027/28 wheat outlook.

Benoît Fayaud
Senior Manager
Grains and Oilseeds Analysis Expana

Rising energy, fertilizer and freight costs triggered by the

Middle East conflict and the effective closure of the Strait of Hormuz are adding fresh pressure to the global wheat market, even as ample supply continues to cap prices. Benoît Fayaud, Senior Manager, Grains and Oilseeds Analysis at Expana, says the crisis has so far lifted wheat export prices by a relatively modest $5-15 per tonne, but warns that the bigger threat lies in surging nitrogen fertilizer costs and shrinking farm margins that could weigh on wheat quality, acreage and future production decisions. While import demand has not yet slowed and trade flows remain broadly steady, the market is increasingly focused on whether the shock will remain a short-term cost burden or evolve into a more lasting risk for global wheat trade.

In our interview, Fayaud explains how the Hormuz crisis is influencing wheat prices, fertilizer economics, import behavior and procurement strategies across the global market.

What has changed most in the global wheat market since the escalation of the Middle East conflict?

Three main factors have changed in the wheat market since the start of the conflict in the Middle East: oil prices, natural gas prices, and the cost of nitrogen fertilizers.

For example, in Western Europe granular urea has risen by €70 per tonne since the end of February, reaching €745/t on 27 March. “Urea ammonium” has also gone up by the same amount, to €430/t. This rise is explained by the fact that the Middle East accounts for more than 30% of global nitrogen fertilizer exports, and natural gas is a key feedstock in their production.

As a result, farmers are facing much higher costs for nitrogen fertilizers and fuel — while the price of wheat has not increased to the same extent.

As the Hormuz crisis pushes up freight rates, bunker costs, insurance, and broader risk premiums, how significantly is this affecting the landed cost of wheat for major importers?

On average, wheat prices have risen by $5–15 per tonne at the export point from major suppliers such as France, Argentina and Russia. At the same time, freight costs to the Middle East and to other key importers climbed by 10–20% between early February and late March — equivalent to roughly $3–8/t on average depending on the shipping route. So, although the rise in wheat import costs is noticeable, it remains moderate for now.

How is buyer behavior changing: more forward coverage, or shorter and more cautious purchasing?

Middle Eastern countries — especially Iran — have bought large volumes of wheat since the start of the marketing season on 1 July 2025. Aside from Iran, imports into the region have continued at a steady pace. Iranian purchases, however, have slowed sharply since the end of 2025 after heavy buying in the autumn.

Elsewhere in the world, we don’t yet see any slowdown in buying by the main importers. Spot and nearterm wheat prices remain attractive to buyers, encouraging them to purchase the abundant 2025 harvest.

Which importing regions are most vulnerable if this disruption persists?

Middle Eastern countries are the most exposed if the conflict continues, because tensions around the Strait of Hormuz and the Bab elMandeb could disrupt shipping through these key chokepoints. Asia and Africa are also vulnerable due to rising freight costs. For now, however, disruptions remain moderate.

How serious is the fertilizer shock for wheat production economics in 2026/27?

For the 2026/27 season, the impact of the fertilizer shock on production should be limited in the Northern Hemisphere, especially for winter wheat, because sowings were completed several months ago. Most fertilizers have already been purchased by farmers there and should be applied. There is, however, a moderate risk to protein content if farmers cut back on the final nitrogen application.

The risk to area and yield is higher in the Southern Hemisphere. 

For now, we still forecast a decent global wheat crop for 2026/27 of about 782 million tonnes (Mt) — below the record 2025/26 level of 813.6 Mt but above the fiveyear average of 772.4 Mt.

The production risk is larger for the 2027/28 marketing year. We can expect a reduction in sown area next autumn in the Northern Hemisphere because of poor margins for farmers, especially in Europe.

Do you expect lower nitrogen use to affect wheat protein more than yield, especially in Europe?

This is a genuine risk, even though we haven’t seen clear signs of it so far. At the same time, yields should be lower than last year — given the record highs in 2025 — which would reduce the dilution effect on grain protein and could therefore limit any drop in protein content.

If fertilizer prices remain elevated, where do you see the biggest risk: lower yields, lower protein, or shifts in crop choices?

In chronological order, the first impact would hit spring wheat plantings in the United States, Canada and Russia in the coming weeks, and the sowing levels of winter wheat in Australia and Argentina. These effects are expected to be limited. Next, there is a moderate risk to protein levels in winter wheat that will be harvested this summer in the Northern Hemisphere. The biggest risk concerns the area to be sown next autumn for the 2027 harvest. Farmers may favor crops that require less nitrogen—such as sunflower, soybeans and barley—but above all we can expect a reduction in total planted area.

What are the most important indicators the market should watch in the coming weeks?

The first thing to watch in the coming weeks is crop conditions. Weather remains the main factor and will largely determine production levels in 2026.

It’s also important to follow freight costs and soymeal supplies. Strong biodiesel margins could lead to more soybean crushing, increasing the amount of soymeal available — which in turn could replace a significant share of wheat in animal feed.

At the same time, if fuel prices rise further, wheat shipments could be hit as transport becomes more expensive. Finally, if the conflict persists, keep a close eye on fertilizer supplies: shortages or higher prices could weigh on wheat production, especially for the 2027/28 season.

What is your base-case outlook for global wheat prices, trade flows, and quality spreads if the conflict continues?

In the coming weeks, wheat prices will likely partially track crude oil movements but remain capped by the strong supply fundamentals in 2025/26. At current oil price levels, the wheat supply and demand outlook for 2026/27 looks fairly comfortable despite the geopolitical context, so prices could fall if tensions around oil and fertilizers ease. Trade flows should stay steady and strong for the rest of 2025/26, but should weaken in 2026/27 as North Africa and the Middle East will have good harvests and also if feed rations shift more than expected from wheat to soymeal.

What should flour millers and grain traders prioritize in their procurement strategies for the next 6 months?

For highquality wheat, and given current forward curves in the futures market, buyers should target the 2025 crop, which benefits from ample supplies and trades at a discount to the 2026 crop.