The disruption of shipping in the Strait of Hormuz has impacts on the global market that extend far beyond the energy sector; the breakdown of the fertilizer supply chain is becoming a core driver of a new round of increases in global food prices.
According to the Chase Trading Desk, Citigroup released its latest commodity report on March 11, with a core conclusion pointing to a risk chain that the market has underestimated: The shipping disruption in the Strait of Hormuz is not just an energy crisis, but a brewing fertilizer crisis that will deeply impact global grain prices through cost transmission mechanisms.
This report sends a clear bullish signal: Citigroup has raised its target price for CBOT corn to 475 cents per bushel for the next three months, wheat to 600 cents per bushel, and soybeans to 1250 cents per bushel, noting that fund positions have significantly shifted to net long.
With multiple catalysts such as tightening fertilizer supply, increased U.S. export competitiveness, and changes in biofuel policies, the upward bias of the CBOT grain complex is strengthening.
<h2>Fertilizer is the Hidden Protagonist of This Crisis</h2>
While the market focuses on the impact of the Strait of Hormuz on oil and gas supply, Citigroup's analysis reveals a deeper transmission path—the breakdown of the fertilizer supply chain.
According to Citigroup research data, Middle Eastern countries exporting through the Strait of Hormuz play a crucial role in global fertilizer trade:
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Urea: The Middle East accounts for about 36% of global trade volume, with over 90% of urea production in the region used for export;
Ammonia: The Middle East accounts for about 29% of global export volume, with approximately 16% transported through the Strait of Hormuz;
Diammonium phosphate: The Middle East accounts for about 25% of global total trade volume;
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The importance of fertilizers to food production is self-evident—Fertilizer costs account for 50% to 60% of the variable costs of major grains. If fertilizer supply continues to tighten, its impact on agricultural yields will be profound and lasting, especially for Brazil and India, two major global food producers.
What is even more concerning is the second-order effect: The blockade of the Strait leads to reduced LNG flows, which in turn forces fertilizer plants in other regions to shut down. Indian urea producers have already closed factories due to the cutoff of LNG supplies from Iran, directly threatening fertilizer supplies for Brazil and India’s next planting season—both of which will begin next month.
Citigroup clearly states in its bullish scenario: If the blockade lasts more than six weeks, it will provide a decisive upward push for corn and wheat prices.
<h2>Citigroup Raises Target Prices for Three Major Grains, Strengthening Bullish Sentiment</h2>
In this report, Citigroup has comprehensively raised its price forecasts for the CBOT grain complex:
Corn: Supply and demand both tighten, bulls turn more aggressive
Citigroup has raised its three-month target price for corn to 475 cents per bushel and its twelve-month target price to 525 cents per bushel (baseline scenario). In a bullish scenario, corn prices could reach 600 cents per bushel
Citigroup expects the USDA to further lower the new crop planting area to 94 million acres in its report at the end of March, leading to tighter market supply. Additionally, U.S. ethanol production is strong year-on-year, and discussions on the policy shift from E10 to E15 are progressing, providing additional bullish factors. Brazil's supply may fall below previous expectations due to drought and a decrease in planting area.
Soybeans: Chinese demand provides support, biofuel policy adds variables
Citigroup predicts soybean prices will rise to 1,250 cents per bushel within three months and stabilize at 1,200 cents per bushel within 12 months. China continues to purchase U.S. soybeans and has committed to further advancing trade negotiations, providing a bottom support for soybean exports.
Moreover, the revised Renewable Volume Obligation (RVO) proposal in the U.S. is expected to be finalized by the end of March, which will significantly impact soybean oil demand and soybean crushing balance, acting as a dual catalyst for prices. In a bullish scenario, the target price for soybeans is 1,450 cents per bushel.
Wheat: Dual catalysts of fertilizer and geopolitical factors
Citigroup expects the average price of wheat to be around 600 cents per bushel in 2026, with a target price of up to 700 cents per bushel in a bullish scenario.
Wheat is particularly sensitive to the situation in the Middle East: on one hand, limited fertilizer supply will force U.S. farmers to reduce fertilization, having a profound impact on yields; on the other hand, if there is a significant disruption in Russian supply or if European import demand rises unexpectedly due to drought, it will create additional price catalysts. If the conflict in the Middle East is resolved within four weeks, or if a ceasefire between Russia and Ukraine normalizes Black Sea transportation, prices may fall back to 500 cents per bushel.
Additionally, according to the latest Commodity Futures Trading Commission (COT) report, the changes in positions of Money Managers confirm a significant shift in market sentiment. The net position of corn Money Managers has turned into a net long position, reaching 53,000 contracts; the net long position for soybean Money Managers has reached 198,000 contracts; while wheat Money Managers remain net short, but have significantly narrowed to a net short of 25,800 contracts.
At the same time, the hedging coverage of producers is still insufficient, and there is motivation to seek hedging at current price levels, which may provide additional liquidity and price support to the market.
<h2>Farm income and cost pressures: Rising fertilizer prices will push up CBOT trading</h2>
Before the escalation of the situation in the Middle East, overall U.S. farm income remained stable, and input prices were relatively steady. However, fertilizer prices have begun to rise and may soon reach the high levels seen during the Russia-Ukraine conflict—when soaring fertilizer prices had a profound impact on global food markets.
Seeds, fertilizers, and fuel together account for over 60% of the non-fixed costs (CoP) of a typical grain farm, and rising energy prices will further increase total costs by about 6% to 8%. Citigroup believes that the aforementioned inflationary pressures will significantly drive up CBOT futures prices

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Citigroup's latest report reveals a severely underestimated shock chain: the Middle East controls 36% of global urea and 29% of ammonia exports, and the Strait blockade is pushing the fertilizer supply chain to the brink of collapse. Fertilizer costs account for over 50% of variable costs in grain production, and the planting season in Brazil and India is about to begin next month. Based on this, Citigroup has raised the target prices for corn, wheat, and soybeans, with significant upside potential in a bull market scenario, and capital positions have fully shifted to long

- The disruption of shipping in the Strait of Hormuz is impacting global markets beyond energy, significantly affecting fertilizer supply chains, which is driving a new surge in global food prices.  
- Citigroup's recent commodity report highlights that the shipping disruption is not just an energy crisis, but foreshadows a fertilizer crisis that will deeply impact global grain prices through cost transmission mechanisms.  
- Citigroup has raised its price targets for major grains, forecasting corn at 475 cents/bushel and wheat at 600 cents/bushel in the next three months, amid tightening fertilizer supply and geopolitical tensions.

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The blockade of the Strait of Hormuz affects not only oil and gas but also fertilizers

霍爾木茲海峽封鎖得不只是油氣，還有化肥