Middle East Volatility Puts Fertiliser Prices Under Pressure - Grain SA and FERTASA Highlight Risks to Producers

The ongoing conflict in the Middle East, particularly involving Iran, is driving significant volatility in global energy and agricultural input markets, placing renewed pressure on fertiliser prices and raising concerns for South Africa’s grain producers.

International oil prices (Brent crude) have risen sharply - in some cases exceeding 0 per barrel - amid uncertainty around disruptions to key shipping routes such as the Strait of Hormuz. This volatility is already filtering through to global fertiliser markets, particularly nitrogen-based products, with further increases expected.

Grain SA and FERTASA have jointly warned that these developments will have direct and material implications for South African producers, who remain particularly vulnerable due to the country’s reliance on imported fuel and fertiliser.

Rising diesel costs are expected to increase the cost of planting, harvesting and transport, while fertiliser price pressure - driven by disruptions in a key global supply region - will further strain already tight production margins. In addition, exchange rate pressures and heightened market volatility are expected to complicate planning and input procurement decisions.

At a time when producers are already operating in a constrained margin environment, Grain SA and FERTASA emphasise the importance of responsible conduct across the agricultural value chain.

“As partners within the same value chain, there is a shared responsibility to support sustainable production and to avoid placing additional strain on primary producers during periods of short-term market volatility,” the organisations said.

Practical steps for producers

In response to current market conditions, Grain SA and FERTASA encourage producers to take proactive steps (but not panic) to manage risk and limit exposure to rising input costs:

• Reassess fertiliser strategies based on soil analysis and realistic yield expectations
• Improve fuel efficiency through optimised operations and well-maintained equipment
• Update financial planning, including enterprise budgets and break-even levels
• Consider available risk management tools such as forward pricing or diversification
• Monitor global market developments closely, as conditions remain fluid
• Dependant on the length of the turmoil in the Middle East, secure fertiliser and fuel requirements early, where financially feasible

Additional technical guidance on fertiliser strategies is available through FERTASA resources.

Supporting sustainable production

While current conditions present clear challenges, proactive management and coordinated support across the value chain will be critical to safeguarding farm profitability and ensuring the long-term sustainability of South Africa’s grain sector.

Grain SA and FERTASA will continue to monitor global developments and engage stakeholders to support producers during this period of heightened volatility.

ENDS