Geopolitics fuel grain market volatility | Kpler Geopolitics fuel grain market volatility | Kpler - May 29, 2026

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Matt Darragh<br>Grains & Oilseeds Analyst

Ishan Bhanu<br>Lead Agricultural Commodities Analyst

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Grains

US-Iran conflict

Soybeans

Corn

Fertilizer

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https://kpler.com/blog/geopolitics-fuel-grain-market-volatility

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Blog/<br>Market Update/<br>Current post

May 29, 2026

Geopolitics fuel grain market volatility

Key takeaways<br>GCC countries have not imported any grain products via the Strait of Hormuz since 28 February; Iran has been importing more at Chabahar, but volumes there cannot offset the loss via the Strait<br>Over 40 vessels carrying more than 2 Mt of fertiliser remain bottled in the Middle East Gulf (MEG), with no meaningful export offset via alternative ports<br>Urea has been quoted at around $1,000/t in parts of the US; Kpler's current base case corn yield for 2026 is 179 bu/ac<br>The soybean-corn new crop futures ratio is at approximately 2.45, up from 2.35 a year ago, supporting a shift in planted acres away from corn<br>For China's domestic grain fundamentals, rising stocks, declining sow numbers, and multi-year low hog prices do not support the volumes implied by its $17 billion agricultural trade commitment with the US. So, there is a geopolitical motivation<br>NOAA places El Niño probability at 98% for Q4 2026, threatening Australian wheat yields at a time when planted area may also fall due to higher fertiliser costs<br>Grain flows are reshaping across the Middle East<br>The Strait of Hormuz remains effectively closed for grain trade. Since 28 February, GCC countries have recorded zero grain imports via the Strait. With the exception of one cargo to Iraq, all vessels entering have been unloading at Bandar Imam Khomeini (BIK). Iran had built up a buffer of pre-positioned laden vessels at BIK before the escalation. That buffer has since been exhausted. Now there is just a trickle of imports via the Strait, and rising imports at Chabahar on Iran's coast to the east. Imports there have picked up, but not enough to compensate for the lost Strait volumes. Iran has some near-term leeway with the domestic wheat harvest underway but monthly imports have declined.<br>On the routing side, most vessels originating from South America destined for Saudi Arabia are moving north to the Mediterranean to access the Red Sea. Also, some cargoes bound for Iran are diverting to transshipment points off the western coast of India, with operators offloading to vessels willing to take on the insurance cost and transit risk of entering the MEG. Caspian coaster activity has ticked up, but volumes are low and offer little offset.<br>Fertiliser: A disruption without an offset<br>Approximately 25% of the world's seaborne nitrogen fertiliser trade originates from the MEG. With Strait crossings minimal, that supply is effectively not moving. Unlike in the grain trade, where stronger import volumes have emerged through East Coast UAE and West Coast Saudi Arabia, there has been no equivalent fertiliser export offset. A brief uptick in phosphorus fertiliser shipments from the Red Sea appeared in April, but May data does not suggest this trend is strengthening. Just over 40 vessels carrying over 2 Mt of fertiliser products remain trapped inside the MEG.<br>Global fertiliser prices remain elevated. For example, for the middle of May, urea has been quoted at around $1,000/t in parts of the US. This is both a planting story and a yield story that will play out across both hemispheres through the second half of 2026.<br>Application rates of nitrogen fertiliser under consideration<br>The timing of this disruption matters. June through August is a key nitrogen fertiliser application window for several crops across the Northern Hemisphere:<br>Corn across the US and Europe is moving through the leaf development stage, where nitrogen uptake has a direct relationship with yield potential<br>Rice across much of Asia is approaching tillering, the phase most sensitive to nutrient availability<br>Cotton across the southern US, China and India is entering a similarly responsive growth stage<br>In the Southern Hemisphere, Australian and Argentine wheat and barley crops will begin tillering by August.<br>The US corn situation illustrates the pressure most clearly. Kpler's current base case yield for 2026 is 179 bu/ac, below the trend line. Our model projects a fertiliser-related yield drag of around two percent at current price levels. Approximately, a one standard deviation fertiliser effect accounts for roughly four percent yield loss while a one standard deviation weather effect is eight percent. Good weather can absorb much of the headwind, but the fertiliser constraint makes reaching last year's yield ceiling structurally harder regardless.<br>On acreage, the soybean-corn new crop futures ratio at approximately 2.45, up from 2.35 a year ago, already supports...