Wheat Futures Surge 30% as Iran War Disrupts Fertilizer Supply and U.S. Drought Hits Production
Benzinga reported Saturday that wheat futures surge of nearly 30% this year reflects a collision of drought, geopolitical disruption, and worsening climate conditions. Chicago Mercantile Exchange wheat contracts are now trading around $653 per bushel, driven by U.S. crop failures and a global fertilizer crunch tied directly to the conflict with Iran.
Hormuz Blockade Starves Farms of Fertilizer
The U.S.-Israeli military campaign against Iran has effectively bottlenecked the Strait of Hormuz, disrupting fertilizer shipments to global markets. The consequences are landing hardest on American farmers. An April survey from the American Farm Bureau Foundation found that nearly 60% of farmers reported deteriorating financial conditions as input and fuel costs climbed sharply. A further 70% said they could not meet their full fertilizer needs for the season.
Agriculture Secretary Brooke Rollins announced in May that the USDA plans to revive a Biden-era grant initiative aimed at expanding domestic fertilizer production. The Fertilizer Production Expansion Program originally allocated $500 million in 2022 to reduce American farmers’ dependence on foreign supply disrupted by the Russia-Ukraine war.
U.S. Wheat Output Drops to Levels Not Seen Since 1972
Drought is compounding the supply-side crisis at home. Federal data covering mid-May showed more than half of the continental United States was experiencing drought conditions, with over 62% of the lower 48 states affected. The USDA’s May crop report projected total U.S. wheat production at its lowest point since the 1972-73 season. Winter wheat is expected to fall to its smallest crop since 1965-66. Export volumes are forecast to decline by 135 million bushels year-over-year, settling near 775 million bushels.
Also Read: Global Food Prices and the Commodities Outlook
El Nino Adds a Third Layer of Risk
Climate forecasters are warning of additional pressure ahead. The National Oceanic and Atmospheric Administration’s Climate Prediction Center has placed an 82% probability on a shift from neutral conditions to El Nino between May and July. If that transition materialises, it could drive record temperatures across key growing regions globally. Research published in the journal *Science* by Dartmouth College economists estimated that past El Nino cycles have caused roughly $4.1 trillion in cumulative global income losses, with economic damage persisting well after the climate event subsides.
Background: A Market Already Under Pressure
Grain markets entered 2026 in a fragile state. Russia’s continued dominance of global wheat exports and lingering supply-chain disruptions from prior conflict cycles had kept inventories tight heading into the season. The layering of domestic drought, a geopolitics-driven fertilizer squeeze, and a potentially severe El Nino cycle has sharpened bullish sentiment considerably across agricultural futures desks.
Read Next: NOAA El Nino Forecasts Explained
