Porto Alegre, 12th March, 2026 – In a very different way compared to the Pandemic period, when the war in Ukraine impacted fertilizer and commodity prices, the war in Iran also has its impact on the global commodity environment. We cannot relate the two events as identical, however each one, in different ways, has direct and indirect effects on the flow of goods due to the Strait of Hormuz and, this time, affecting important markets such as China. Therefore, the first week of the war brought price movements in commodities, particularly in oil and maritime freight. The suspension of fertilizer sales by China was one of the surprises in this environment. For prices on the Chicago Board of Trade, the effect is more direct on commodities related to biofuels, such as soybean oil and corn. But also on supply risks, such as the flow of oil, natural gas, fertilizers and chemicals in general. The risk regarding the arrival of food to the Middle East is also a fundamental point, such as meat and grains. The reopening of the Strait of Hormuz is the key factor for markets and appears to be the next objective within the war environment. For Brazil, the effects are in the meat market, with difficulties and higher costs for deliveries to the Middle East, but without a medium-term effect on corn and urea. These two commodities, due to the time of the year, have limited direct impact on the Brazilian domestic market.
The rise in commodities during the pandemic was not associated only with the war in Ukraine. The so-called Black Sea war found an environment of rising prices because it involves a region with strong flows of fertilizers, KCL, petroleum derivatives, sunflower oil, corn and wheat. The increases in these commodities were expressive during the war, which continues to this day. However, it is important to note that this episode was inserted within a broader context, namely a pandemic with global disruptions in the flow of goods and supply chains. The war was another variable feeding a global problem.
The context of this war installed in the Middle East is very different compared to the Ukraine episode. We point this out because there is a certain perception that the situations are similar and could leverage commodity prices as occurred in 2022/23/24. The Middle East has its importance in the oil and derivatives environment, as well as in some fertilizers. But it is also important due to the import of food, such as corn, wheat and meat, among others. Brazil is the main supplier of Halal meat to the region and therefore is the most affected in the export environment in the poultry and beef segments.
The first impact falls on oil prices, not only due to Iran, but also because of attacks against countries not participating in the conflict but receiving attacks in civilian areas and near oil fields. Countries such as Qatar and Kuwait halted oil and gas extraction. Therefore, there is a situation that prevents production and another that inhibits the outflow of regional production. The Strait of Hormuz closed by Iran imposed restrictions on the flow of goods in both directions, but mainly for oil and derivatives destined for important markets such as China.
Thus, some price movements occurred during the week. Oil, of course, jumped to US$ 90 per barrel in New York and close to US$ 110 in London. Urea rose from US$ 360 in December to US$ 420 per tonne during the week. These increases are far from those observed during the pandemic and can be considered absorbable at this moment. At this time, South America, Europe and Russia are outside the urea buying market, therefore with limited short-term impact. The markets affected may be defined as the United States, where planting begins in April, as well as China. This environment may negatively influence planting decisions in these two countries due to higher production costs.
Unlike a war aimed at territorial expansion or punctual issues, this war has a defined mission, namely to replace the Iranian government with another more “friendly” to the West. In this process there is no negotiation, no withdrawal, and no expectation that the conflict will end until one of the sides surrenders. Markets are more involved because Iran controls an important commercial passage between the Persian Gulf and the Gulf of Oman. Traffic of goods is immense, both inbound and outbound, but China appears to be particularly affected in this environment due to oil and derivatives. During the week China announced the suspension of exports of some petroleum derivatives, including diesel, and some fertilizers.
The main question is: how long will the war last? This is a question that will not be determined by the UN or by any major interventionist actor. It is not possible to estimate its duration, but it is important to evaluate that the Strait of Hormuz will eventually be reopened by the war itself rather than by agreements. Until then, the structure of commodity prices and the global market environment will remain tense and subject to any forward bias that even artificial intelligence cannot anticipate.
From the exchange rate perspective, with two central bank meetings ahead, markets should price in higher inflation due to fuels. Expectations of higher inflation inhibit interest rate cut decisions at this moment. The meeting of the Federal Reserve on the 18th should maintain rates, supporting the U.S. dollar at stronger levels. The uncertainty lies in the movement of long-term bond yields in this more tense environment. If yields rise, this will support further dollar appreciation against other currencies.
The Brazilian Copom will also meet on the 18th. Although the government wishes to contain domestic fuel price increases by not passing through the external environment to consumers during an election year, the situation may become difficult. In the case of very strong increases in oil prices, it becomes difficult to absorb large internal margin losses without risking supply shortages. The Central Bank may decide to postpone the first Selic rate cut at this meeting due to inflation risks derived from the rise in oil prices. Postponing rate cuts would also postpone the possibility of a stronger exchange rate correction, at least due to this factor. Naturally, the Brazilian real will be influenced by the external environment and may experience rallies, though less intense if interest rates remain high.
U.S. corn exports remain strong
During the week of the USDA monthly report, the market is focused on oil price movements. Meanwhile, U.S. exports remain strong, with weekly sales reaching a solid volume of two million tonnes. With few numbers likely to change in projections, the market continues observing weather in South America and focuses on March 31, when the Planting Intentions report will be released. The rise in urea may impact planting decisions for the 2026 crop, even as corn prices also reposition in Chicago.
This March USDA report contains few variables to adjust. Minor adjustments may occur in domestic demand and export environments, but numbers appear well aligned. If there is any increase in ethanol demand with reflections on corn demand, this will likely appear in future reports.
After this March report, the market will concentrate on Planting Intentions. Private firms will release their estimates and await the USDA survey to evaluate producers’ real willingness to plant. Soybean oil continues to drive soybean prices this season, and recent oil price increases reinforce this situation. With more expensive fuels, the decision regarding the biodiesel mandate may become easier. The same logic applies to ethanol, with consequences for corn. However, there is no plan to raise the ethanol mandate in the short term, which does not help motivate planting.
As a consensus, a reduction in corn area of 4 to 5 million acres would not represent a structural change in the price environment, though it would increase climate sensitivity. A cut above these levels would certainly be bullish for corn. The new factor is the rise in urea. The U.S. supply market is likely already covered for this crop year. However, many Midwest farmers typically purchase inputs shortly before planting through cooperatives. The combination of higher urea prices and stronger soybean prices could determine a larger reduction in corn area.
Meanwhile, U.S. exports continue to show surprising strength, which may imply changes in global demand projections. Weekly sales reached 2 million tonnes, a strong volume for this time of year. Accumulated sales now reach 65 million tonnes, compared with 49.5 million tonnes in the previous cycle. This window between Brazil’s absence from exports and the entry of the Argentine crop provides a good opportunity for U.S. sales.
The rise in wheat prices once again stood out during the week. Concerns about weather in the Northern Hemisphere for winter crops, the flow of wheat to the Middle East and Russia’s stance during the war are impacting prices and spilling over into corn.
Weather in Argentina remains relatively regular, though there are always areas with more problematic conditions, such as southern Buenos Aires and La Pampa. With another thirty days of regular rainfall, the good Argentine crop should reach the export market, providing supply conditions to the global market at least until the Brazilian safrinha enters the market.
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