Asia’s corn import prices climbed to U$271 per metric tonne on March 9, marking their highest level in nearly three years and a price last seen on July 26, 2023.
The increase has been driven largely by a roughly U$10‑per‑tonne jump in freight rates following the escalation of war in the Middle East.
The increase has been driven primarily by the effective closure of the Strait of Hormuz after the US and Israel struck Iran on February 28, killing Iranian supreme leader Ali Khamenei.
Since then, the conflict has spread across the Middle East to countries such as the United Arab Emirates, Qatar, Saudi Arabia, Kuwait, and Turkey.
Crucially, the conflict has blocked passage along the Strait of Hormuz, the vital sea lane for oil and gas export.
This disruption has tightened global fuel supplies and caused bunker fuel prices to surge, which in turn has escalated freight rates for bulk vessels transporting corn from major exporting regions such as the US and Brazil.
“Marine fuel bunker prices have more than doubled after the closure of the Strait of Hormuz, and as bunkers are the primary fuel for bulk vessels that transport the corn into Asia from major producers such as the US and Brazil, the higher fuel costs have translated into higher freight rates,” said Edward Low, price reporter, agriculture and food, S&P Global.
The commodity insights company says freight rates have increased by more than $10 per metric tonne since February 28.
“Many traders have also reported difficulty in finding shippers willing to provide freight due to expectations of a further increase in fuel prices,” said Low.
The impact on corn in Asia
At the moment, feed millers across South Korea, Japan, Vietnam, Taiwan, and Malaysia have adopted a “wait-and-see” approach as many have already secured their supply needs through June and began purchasing July shipments before the conflict escalated.
Low said supply availability from origin markets such as the United States and Argentina remains strong, adding that “it is only a matter of freight costs that could delay purchasing.”
Eventually, buyers will need to accept the higher import prices as the war drags on.
“Feed millers will still need to bite the bullet and accept the higher corn prices if they want to maintain their mill operations at a certain point. A Singapore based trader told Platts that late April and May could be the time when feed millers have no choice but to purchase the corn cargos,” said Low.
The conflict’s impact extends to agricultural inputs, particularly fertilisers, for which the Middle East is a major supplier.
Persistent disruption to Hormuz and continued elevation in freight costs would make fertiliser procurement difficult and expensive.
“Major grains and oilseeds producing countries such as Brazil are reliant on Middle Eastern fertiliser supply and thus will quickly face higher crop prices,” said Low.
On the other hand, China will be less exposed in the short term due to strategic stockpiles, and the US benefits from domestic production.
“However, all corn crop prices across the world will ultimately increase as the war continues and the Strait of Hormuz remains effectively closed,” Low concluded.
Moving forward, elevated crude oil prices are likely to keep upward pressure on soybean and corn markets.
“Our analysts at S&P Global CERA state that elevated crude oil prices pose upside risk to the soybean and, subsequently, corn prices. Also, to the upside, inflation concerns may lead to greater managed money flow into agricultural commodities.
“Upside risk, however, is balanced by the potential for a slowdown in global trade as shipping costs climb due to rerouting to avoid the conflict zones. Ultimately, the scope and duration of the conflict will be critical in determining the impact on the corn market.”