On July 6, I flagged in a note to South African agribusinesses that we are beginning to see the benefits of the likely memorandum of understanding between Iran and the US aimed at ending the war on agricultural input prices.
Fertiliser and fuel prices have declined notably from the levels of May 2026. That said, uncertainty remains, and it increasingly appears that the talks may end or be paused without a deal given the renewed strikes in the region. This once again presents the immense risk and uncertainty surrounding ship movements in the Strait of Hormuz.
Over the past few weeks, as the peace talks were progressing in a promising direction, we saw the benefits in the relief for fertiliser and fuel prices. The recent strikes introduce new risks to fertiliser and fuel prices, particularly if we see yet another holdup of ship movements in the region. There is considerable uncertainty now about how the neighbouring countries would react to recent developments.
From a South African perspective, we remain concerned about fuel and fertiliser prices as the 2026/2027 season nears. South Africa is roughly three months away from the start of the 2026/2027 summer crop season in mid-October.
Farmers typically place input orders well before the start of the season. Still, given that the current 2025/2026 summer crop season is over a month late and the maize harvest is still under way, the placement of input orders for the next season may also be slightly delayed.
The combined cost of fuel and fertiliser typically accounts for about half of the input costs in field crops. Thus, we worry about the renewed war action, which presents risks to input prices.
Having such a substantial share of input costs rising at a time of falling commodity prices means that some farmers will be in a tough financial corner.
Already, the possibility of financial pressures has led some to question whether South African farmers would leave some land fallow for a season.
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