Grain prices surge as Hormuz disruption, El Niño squeeze global food supply

International grain prices are climbing sharply as the convergence of the US-Iran war's disruption of the Strait of Hormuz, soaring oil prices, and a strengthening El Niño threatens global food supply chains heading into the final months of 2026.

Fertilizer Chokepoint

The Strait of Hormuz, the narrow waterway between Iran and the Arabian Peninsula, has become the focal point of a deepening agricultural crisis. According to the Chosun Ilbo data show US oat prices surged 18.9% over the past month in international futures markets, while US corn rose 16.2% and US soybeans climbed 11.4%.chosun

Hong Seong-gi, a researcher at LS Securities, identified the Iran war's blockade as the core driver, noting that an estimated 35% of urea, 25% of ammonia, and 44% of sulfur used in phosphate fertilizer production transit through the strait. A United Nations report from August found that combined export volumes through the Hormuz chokepoint had declined by 54% between April 2025 and April 2026. The FAO warned earlier that the fertilizer scarcity caused by Hormuz disruptions would lead to lower yields and tightening food supplies in the latter half of 2026 and into 2027.fao+2

Oil and Geopolitical Pressures Compound the Crisis

Rising crude oil prices are straining the entire grain production and distribution network. Dubai crude settled near $102 per barrel on September 4, surging roughly 30% in about a month, while Brent and West Texas Intermediate crude jumped 13–14% over the same period. The prolonged Russia-Ukraine war continues to compound the problem, as import-dependent countries shift grain purchases away from Ukraine toward the US, Kazakhstan, and Argentina, inflating export premiums.chosun

CNBC reported in late August that corn and wheat prices had jumped to their highest levels in more than three years, driven by mounting supply concerns and disruptions to Ukrainian exports.cnbc

El Niño Adds a Wild Card

Compounding these pressures, NOAA's Climate Prediction Center reported in August that there is a greater than 90% chance of a very strong El Niño during the Northern Hemisphere fall and winter of 2026–27, with a 69% probability that the event will exceed the strength of any El Niño observed since 1950. Record heatwaves in North America and the UK have already lowered harvest forecasts.cpc.ncep.noaa+1

Agricultural experts warn that the crisis may extend well beyond this year. If fertilizer supply issues persisted during the March–April sowing season, productivity during the third and fourth quarters could decline, and even if conditions normalize after a poor harvest, yield recovery may take over a year. PL Capital, the Indian brokerage, echoed these concerns in a strategy report, warning that a stronger El Niño could drive higher prices of agricultural commodities including coffee, cocoa, palm oil, and soybean, adding pressure to food inflation globally.investmentguruindia+1