— The Middle East conflict is hitting Brazil’s farm sector through diesel, fertilizers, and freight — with urea prices up 37% on global benchmarks and ammonium nitrate up 28% at Brazilian ports
— Brazil imports 85% of its fertilizers, with roughly 41% of its urea supply transiting the now-disrupted Strait of Hormuz; only 30% of inputs for the 2026/27 summer crop have been purchased so far, below the 40% historical average
— Farmers in Rio Grande do Sul have already halted soy and rice harvests over diesel shortages, while analysts warn the conflict could force producers to cut planted area or reduce fertilizer application rates in the 2026/27 season
Brazil agribusiness is facing its most severe input cost shock since the Russia-Ukraine war, but this time without the commodity price boom that cushioned the blow. The escalation of the US-Israel conflict with Iran has disrupted the Strait of Hormuz, sent oil toward $100 a barrel, and triggered a scramble for fertilizers that the world’s largest food exporter can ill afford.
The Rio Times, a Latin American financial news outlet, examines how the conflict is transmitting through energy, fertilizers, and logistics to threaten the planning of Brazil’s 2026/27 crop season — a harvest that could determine whether the country extends or breaks its run of record grain production.
Brazil Agribusiness: Diesel First, Fertilizers Next
The immediate pain is diesel. Farmers in Rio Grande do Sul have suspended soy and rice harvests because fuel simply ran out at the farm gate. In Goiás, producers report diesel price increases of R$1 ($0.18) per liter. São Paulo pump prices for diesel jumped 8.4% in a single week, with gasoline up 11%, according to the national petroleum regulator ANP.
“Concern number one is diesel — prices and continuity of supply,” said Bruno Lucchi, technical director of the CNA agricultural confederation. The timing is brutal: Brazil is simultaneously harvesting its summer crop and planting winter wheat and second-crop corn, both of which depend on mechanized operations running on diesel.
But the structural threat is fertilizers. Brazil imports 85% of its supply, and the Middle East accounts for roughly 35% of global urea trade, 25-35% of ammonia, and a significant share of phosphate logistics through Hormuz. Qatar Energy suspended production at Ras Laffan — the world’s largest LNG and fertilizer hub — after Iranian attacks, cutting off a key source of the natural gas feedstock used to manufacture nitrogen-based fertilizers.
Prices Rising, Margins Collapsing
The numbers are already moving. Egyptian benchmark urea surged 37% from $485 to $665 per tonne. At Brazilian ports, urea has risen over 15% and ammonium nitrate roughly 28%, according to consultancy StoneX. Imported nitrogenous fertilizer prices are up about 20% on a regional basis in Mato Grosso, according to the Famato state agricultural federation.
The problem is that commodity prices are not following costs upward. Corn prices on the B3 exchange have risen, but not enough to offset the fertilizer surge. Rabobank warns that fertilizer cost inflation is becoming structural while grain prices may not react proportionally — the classic margin compression that devastates farm profitability.
“Not even during the pandemic did we see such a drastic impact with price increases and diesel shortages,” said Abramilho president Paulo Bertolini. The corn producers’ association warned that a “save yourself” mentality is setting in across the sector.
The real risk lands in September, when planting for the 2026/27 summer crop begins. Only 30% of fertilizer needs have been purchased so far, below the 40% historical average. If prices keep rising, the government’s own agriculture ministry has warned of a potential 1-3 million tonne deficit in phosphate fertilizers and a possible 20% shortfall in supply — enough to compromise productivity and food security. Agriculture Minister Carlos Fávaro urged calm, saying it is “a moment to monitor” rather than panic, but the sector is already pricing in pain. For Brazil agribusiness, the equation is stark: costs are rising, commodity prices are flat, credit is expensive, and the conflict shows no sign of ending.
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