Agricultural Price Hikes Far From Over! Goldman Sachs: Beyond Hormuz and El Niño, Trade Barriers Are the Real Risk Amplifier

The agricultural market enters 2026 with relatively ample inventories, but geopolitical and climate risks are accumulating simultaneously, significantly increasing the upside tail risk for agricultural prices.

According to Zhuifeng Trading Desk, Goldman Sachs commodity research analysts Lina Thomas and Daan Struyven noted in a September 7 report that the Bloomberg Commodity Index Agriculture Spot Index has risen 24% year-over-year, with wheat prices up 41%. Driving this rally are three simultaneously accumulating risks—Hormuz, the Black Sea, and a super El Niño.

More concerning is that these three shocks are hitting against a backdrop of a global agricultural market that is becoming increasingly "inward-looking." After experiencing the pandemic shock and the 2022 food and energy crisis, many economies have clearly shifted policy focus toward food and energy supply security, manifested in higher commodity import tariffs and expanded export controls.

The bank argues that the higher the trade barriers, the lower the threshold for shocks—since 2020, the pace of new agricultural trade restrictions has roughly doubled, and market fragmentation means that an equivalent supply shock will produce larger and more persistent price volatility, significantly increasing the upside tail risk for agricultural prices.

Risk One: Hormuz—Dual Disruption of Fertilizer and Diesel, Directly Impacting Agricultural Production Costs

The Strait of Hormuz is a critical chokepoint for about one-third of global fertilizer trade. Since the situation escalated again in July, fertilizer flows through the strait have declined noticeably.

For nitrogen fertilizers, in 2024, about 34% of global urea trade and 23% of ammonia trade passed through Hormuz. Nitrogen fertilizer directly affects yields of corn, wheat, rice, and other grains, and must be applied every season, making timing crucial. This disruption coincides with the third-quarter purchasing window for major nitrogen fertilizer importers—including corn in Brazil, rice and sugarcane in India, and winter wheat stocking in the EU.

For phosphate fertilizers, in 2024, about 18% of global MAP and DAP trade passed through Hormuz. Brazil's soybean sector imports about 80% of its phosphate fertilizer, and Brazil accounts for 62% of global soybean exports. The July escalation coincided with the critical purchasing window (June-July) for Brazilian soybean growers ahead of September planting. Analysts note that as of mid-June, Brazilian soybean growers had secured only about 68% of expected fertilizer needs (historical norm around 75%), with phosphate prices remaining elevated, accumulating the risk of long-term under-application.

Meanwhile, U.S. diesel prices hit a record high on Friday, September 4. Disruptions around Hormuz constrain about 10% of global diesel exports, and combined with refining capacity outages in the Middle East and Russia, persistently high diesel prices will further squeeze farmer margins and push up agricultural production costs.

Energy security concerns add further pressure: Brazil and India have raised ethanol blending mandates (sugar/corn), and Indonesia has raised biodiesel blending mandates (palm oil), diverting more crops toward domestic biofuel production in major exporting countries and shrinking exportable supplies.

Risk Two: The Black Sea—The World's Most Important Grain Corridor, 15%-20% of Grain Trade at Risk

The Black Sea is the world's most important grain export corridor. Analysts note that renewed Russia-Ukraine tensions put 15%-20% of global grain trade at risk.

Currently, it is the peak season for Black Sea wheat exports, seaborne wheat exports from Russia and Ukraine are already well below normal levels, and wheat prices have risen about 20% since the escalation in early July.

For corn, seaborne corn exports from Russia and Ukraine have also dropped sharply, though August is typically a seasonal low. The bank warns: if disruptions persist into October, when Black Sea corn exports normally enter their peak season, the risk will spread from the wheat market to the global corn market.

Risk Three: Super El Niño—Only Three Times in 75 Years, Forecast to Be the Strongest on Record

The U.S. National Oceanic and Atmospheric Administration (NOAA) estimates that there is over a 90% chance of current El Niño conditions developing into a "super" El Niño, expected to peak in the winter of 2026-2027.

A super El Niño has occurred only three times in the past 75 years, and the current one is expected to be the strongest on record.

Analysts note that a super El Niño could cause severe droughts and floods in multiple major producing regions, with a particularly pronounced impact on the sugar market—global sugar exports are highly concentrated in El Niño-sensitive regions, including Brazil's Center-South, India, and Thailand.

The Panama Canal is also facing threats. The canal handles 10% of global grain trade and 17% of soybean trade. Although the canal entered this El Niño cycle with relatively ample water levels, reservoir levels during the current rainy season are falling rather than rising. On August 20, 2026, the Panama Canal Authority reduced transit capacity due to weak rainfall and declining reservoir levels. Analysts warn that if reservoirs are not sufficiently replenished before the January-May dry season, the canal authority may need to further restrict vessel transits—repeating the 2023/24 restrictions.

The Bigger Risk: Higher Trade Barriers, Lower Shock Threshold

Goldman Sachs believes the three shocks above are severe enough on their own, but what truly amplifies the risk is that they are affecting an increasingly "inward-looking" global agricultural market.

Since 2020, after experiencing the pandemic shock and the 2022 food and energy crisis, many economies have clearly shifted policy focus toward food and energy supply security, manifested in higher commodity import tariffs, expanded export controls, higher biofuel blending mandates, and government-led stockpiling. The bank's data shows that since 2020, the annual rate of new agricultural trade restrictions has roughly doubled.

The bank's core logic is:

First, small shocks can trigger large-scale supply disruptions. Global agricultural trade is highly concentrated among a few major exporters. Once a key exporter experiences even a potential supply disruption, it may trigger precautionary export restrictions, removing far more supply than the original disruption. During the 2008 and 2022 food price crises, cascading export bans amplified global price increases. India's rice export ban ahead of the strong El Niño in 2023/24 removed about 40% of global rice trade from export markets, driving prices sharply higher—even though India's rice production ultimately proved resilient.

Second, market fragmentation amplifies price volatility. Analysts estimate that the price impact of an external shock (such as a weather shock in agricultural markets) depends on its size relative to the market absorbing it. If a regional bloc's market size is only half the global market, an equivalent shock will have double the price impact. Trade barriers and precautionary hoarding measures aimed at enhancing domestic resilience may instead lead to market fragmentation, reduce liquidity, and amplify price volatility—counterproductive to their original intent.