A Guest Blog by Charl Van Zyl from Meridian Macro
Diesel is still stretched, nitrogen has calmed, and phosphate has not. What eight months of data say about how the Gulf shock is feeding into wheat, maize and sugar.
When the war with Iran began on February 28, most of the market’s attention went to crude. That made sense. Roughly a fifth of the world’s oil and LNG normally moves through the Strait of Hormuz, and Brent went from $71 a barrel on February 27 to $138 on April 7, by the EIA’s daily spot series.
But the strait carries more than oil. Producers in Iran, Qatar, Saudi Arabia, the UAE and Bahrain account for 34% of global urea trade, 18% of MAP and DAP trade, 23% of ammonia trade and 49% of sulfur trade, according to the International Fertilizer Association’s 2026 outlook. Farmers do not buy crude. They buy diesel and fertiliser. So the question for anyone who trades or eats grain and sugar is how that input shock travels into crop prices, and how long it takes.
I am a data analyst, so I went back to the numbers. My answer is that the shock arrived in three waves, that each wave behaved differently, and that the common assumption of a long, slow lag from inputs to food is not what the history shows.
Wave one: diesel, the cost nobody can skip
A farmer can delay a fertiliser purchase. A farmer cannot harvest, haul or dry grain without diesel. That makes diesel the first and least avoidable channel.
Diesel has pulled away from crude since Hormuz closed. US Gulf Coast diesel vs Brent, US$ per barrel, daily spot. Source: EIA via FRED, as of Oct 20, 2026.
The chart shows something more important than the oil spike itself. Diesel did not just follow crude up. It pulled away from it. On February 27 a barrel of Gulf Coast diesel cost $34 more than a barrel of Brent. On October 20 the gap was $93, almost four times its 2025 average of $24. The chart alone cannot say why, but the pattern points to a shortage of refined fuel, not just of crude.
At the pump the effect is blunt. The EIA’s US average retail diesel price was $6.28 a gallon in the week of October 19, up 73% from a year earlier and 65% above the last reading before the war. In Europe the bigger farm-input story is gas. The World Bank’s TTF benchmark averaged $25.42 per MMBtu in September, up 126% from February. That matters for food because natural gas is typically 60% to 80% of the cost of making nitrogen fertiliser, per the IFA.
Wave two: nitrogen spiked, then let go
The fertiliser shock was fast and violent. The World Bank’s urea benchmark, priced f.o.b. Middle East, averaged $472 a tonne in February and $857 in April. Outbound fertiliser shipments through the strait came to a near standstill, according to the WTO. The IFA counted 800,000 tonnes of urea sitting on 17 ships west of Hormuz at the end of April, and the International Trade Centre later estimated that urea exports from Hormuz-dependent economies fell 83% by volume in April compared with a year earlier.
Then the price let go. By June urea had fallen back to $453, and in September it averaged $408, below its February level. The WTO’s July review of fertiliser trade noted the same thing, saying urea had “almost reverted to pre-war levels” after doubling. I cannot cleanly separate the reasons, but a June ceasefire briefly eased shipping, and the WTO notes China later allowed limited urea exports under a quota.
The shock moved from energy to fertiliser to crops. % change in monthly average price vs February 2026. Source: World Bank Pink Sheet, EIA and IMF via FRED, data to Sep 2026.
The heatmap is the clearest way I have found to see the sequence. Read it top to bottom and left to right. In April, urea was up 82% from February while maize was up 2% and sugar was down 1%. By September, the colours had moved down the table. Urea was 14% below its February level, but wheat was up 35%, raw sugar up 26% and maize up 14%. Diesel was still up 69% and European gas up 126%.
It is tempting to read that as a neat chain, with expensive fertiliser in spring becoming expensive grain in autumn. I think that is only part of the story, and I come back to it below.
Wave three: phosphate, the input that stayed expensive
Nitrogen grabbed the headlines. Phosphate is where the cost has stuck.
DAP, a staple phosphate fertiliser, averaged $627 a tonne in February and $801 in September, up 28%. Unlike urea it never gave back the gain. Sulfur is one likely reason. Phosphate plants need sulfuric acid, and almost half of the world’s traded sulfur normally leaves through Hormuz. The WTO also notes that Türkiye introduced a temporary ban on sulfur exports and that China tightened controls on urea and sulfuric acid, so restrictions elsewhere added to the squeeze.
The cleanest way to see what this means for a farmer is to ignore the dollar price and ask how much crop it takes to buy a tonne of fertiliser.
Nitrogen is affordable again. Phosphate is not. Tonnes of US maize needed to buy one tonne of fertiliser, monthly. Source: World Bank Pink Sheet, Meridian Macro calculation.
In April a tonne of urea cost the same as 4.0 tonnes of US maize, the most expensive reading since at least 2010 and above the November 2021 peak of 3.62 during the last fertiliser crisis. By September the ratio was 1.70, almost exactly its 2010 to 2026 average of 1.62. For nitrogen, the farmer’s terms of trade are back to normal, helped by the fact that maize itself got dearer.
Phosphate tells the opposite story. A tonne of DAP cost 3.34 tonnes of maize in September, against an average of 2.28. That is above the November 2021 peak of 2.92. To be fair to the data, phosphate was already stretched before the war. The ratio hit a sample high of 4.29 in August 2025, when DAP was expensive and maize was cheap, well before Hormuz was in the news. It had eased to 2.99 by February. The war pushed it back up to 3.98 in June, and it has not returned to normal since.
Why does that matter for crop prices? If farmers respond to expensive phosphate by applying less of it, any effect on yields would show up over seasons, not weeks. Exposure is uneven. The WTO identifies 18 economies that combine heavy import dependence with heavy reliance on Gulf nitrogen, including Brazil, Kenya, Tanzania and Sri Lanka, and says India sourced almost two-thirds of its nitrogen fertiliser imports from the Gulf.
Sugar: the oil link runs through ethanol, and the weather is louder
Sugar is the most interesting case because its link to Hormuz is not mainly fertiliser. It is fuel.
Brazil’s Centre-South mills can turn cane into either sugar or ethanol. When oil is expensive, ethanol pays better and mills shift cane away from sugar, which tightens the world market. That is happening this season. The consultancy Datagro expects the Centre-South sugar mix to fall to 46.7% of cane in 2026/27 from 50.4% last season, with sugar output down 5% to 38.42M tonnes and total ethanol output up 10.4% to 37.2B litres, Reuters reported on October 26.
But it would be wrong to put sugar’s rally mainly on Hormuz. The FAO’s sugar index averaged 114.0 points in September, up 14.7% from a year earlier and at its highest since April 2025. The FAO attributes the rise mainly to a smaller EU beet crop, lower expected output in Thailand, below-normal rain in India as El Niño strengthens, and heavy rain slowing the harvest in Brazil. Datagro counts 28.6 harvest days lost to rain in Brazil this season against a historical average of 13.6. Brazil’s own fuel policy also blunts the oil signal. Datagro’s Plinio Nastari said gasoline subsidies and Petrobras price controls have kept ethanol demand from rising further.
So oil is a real tailwind for sugar this year, through the cane mix. Weather is the bigger driver. Front-month raw sugar futures on ICE closed at 19.10 US cents a pound on Monday, October 26.
Grains: pass-through is fast, not slow
For wheat and maize, the FAO is explicit that Hormuz is one of several drivers. Its cereal index averaged 122.8 points in September, up 17.2% year on year, with maize at its highest in more than three years. The FAO cites lower US yields, reduced Brazilian export availability and Black Sea logistics, and adds that Hormuz shipping uncertainty “kept concerns about fuel, fertilizer and freight costs elevated”, especially for biofuel feedstocks such as maize.
That brings me back to the lag. A common view is that input shocks reach crop prices with a long delay, because fertiliser bought this spring shapes the harvest next year. I tested that with 20 years of World Bank and IMF monthly data.
History says the pass-through is fast, not slow. Correlation of year-on-year % changes in Brent or urea with crop prices k months later, Jan 2006 to Sep 2026. Source: World Bank Pink Sheet, IMF via FRED, Meridian Macro calculation.
The result is clear. The year-on-year change in Brent has a correlation of 0.61 with the change in US wheat prices in the same month, and 0.56 with maize. Six months later those correlations have roughly halved, to 0.32 and 0.28, and after a year they are close to zero. Urea shows the same shape, 0.52 for maize at no lag and 0.03 after 12 months. Correlation is not causation, and 2006 to 2026 includes two big common shocks, 2008 and 2022, that pushed everything up together. But the pattern says grain markets tend to price energy and fertiliser costs at the same time, not with a long delay.
Sugar is the outlier. Its link to Brent is weaker, 0.35 at no lag, and turns slightly negative after six months. Urea and sugar barely move together at all. That fits the ethanol story. Oil affects sugar through the cane mix, not through fertiliser bills.
So why did grains rally months after urea peaked this year? My read is that this autumn’s gains have more to do with weather, yields and the Black Sea than with a delayed fertiliser bill. Grains did respond in spring, but modestly, with wheat up 9% by April. The bigger moves came later, from other sources.
What most people get wrong
The first mistake is to treat “fertiliser” as one price. Nitrogen and phosphate have gone in opposite directions since April, and a farmer’s decision depends on which one their crop needs.
The second is to assume a long, predictable lag from inputs to food. The data says markets price the shock quickly. The slower channel is through yields, and that will show up in production data next year, not in futures charts this month.
The third is to blame Hormuz for everything. Diesel and fertiliser costs are real, but the FAO’s own commentary puts weather, El Niño and the Black Sea ahead of the Gulf for this autumn’s moves in sugar and cereals.
What to watch
- The Gulf Coast diesel premium. A sustained fall from $90 a barrel toward the $30s would be the clearest sign that Gulf refined product flows are normalising.
- DAP vs maize. A drop in the ratio toward 2.3 would mean the phosphate squeeze is easing for next season’s planting.
- The FAO Food Price Index on November 6. It will show whether the cereal and sugar gains held in October.
- UNICA’s fortnightly cane reports. Any move in Brazil’s sugar mix back toward 50% would weaken the oil link to sugar.
- Daily Hormuz transits. Traffic remains far below its pre-war level by every public count I have seen. A visible pickup would matter more for fertiliser than any statement.
The bottom line
Hormuz did reach the farm gate, but not as a single wave. Diesel is still about 65% above its pre-war level and still the cost farmers cannot avoid. Nitrogen spiked and then normalised. Phosphate has stayed expensive relative to what crops earn. Grain prices have historically priced these costs within months, and sugar takes its cue from oil through ethanol rather than fertiliser. If the strait reopens properly, the diesel premium should be the first thing to fall. Phosphate is likely to stay the slowest to heal.
Analysis only, not investment advice.
Charl Van Zyl is a data analyst who writes Meridian Macro, a weekly read on where geopolitics meets markets, built on charts and sourced data. Subscribe free at https://meridianmacroweekly.substack.com