While the United States and Iran have announced a peace deal, RaboResearch general manager Stefan Vogel said many questions remain. “Is there even a deal as it is only a memorandum of understanding and the real deal still needs to be negotiated. Will a deal hold? How quickly will the Strait of Hormuz fully reopen? And will shipping companies return vessels to the region to pick up cargo?” he asked.

For Australian grain farmers, Mr Vogel said the implications of a successful deal could be both positive and negative.

“As a country heavily reliant on imports of fertiliser, diesel and crop protection products, Australia stands to benefit if shipping through the Strait of Hormuz returns to normal,” he said. “However, the timing remains uncertain. Even if both Iran and the US agree that the Strait is open, the shipping industry will first focus on clearing vessels currently stranded in the Persian Gulf. Whether – and how quickly – shipping companies will redeploy vessels back into the region to transport commodities such as fertiliser, crude oil and diesel is still unclear.”

Nonetheless Mr Vogel said with moves towards completing the peace deal currently underway, an improvement in global supply of these key farm inputs is likely, which should eventually lead to cost relief for Australian farmers. “That said, the timing may limit the immediate benefit, as many farmers have already secured most of their fertiliser requirements for the current season in recent weeks.”

From a grain price perspective, the Rabobank analyst said, the deal may have come too early. “Winter grain planting in the northern hemisphere – covering wheat, barley and canola – takes place from July through November. If input costs decline, farmers in these regions may increase planted acreage compared to earlier expectations,” he said. “Rising costs had previously led to expectations of reduced acreage across major producing regions in the US, Europe and Asia. However, improving farm economics could reverse these decisions.”

In that context, Mr Vogel said, a peace deal, if implemented successfully, could ease concerns about tighter global grain supply, particularly looking ahead to mid-2027 when these crops would be harvested.

“However, 2027 remains a long way off, and attention is better focused on the outlook for the 2026 production season.”

Mr Vogel said global wheat production for 2026/27 is forecast to decline by around three per cent year-on-year, driven by lower output in key regions including Australia, Canada and the United States. “This is expected to result in a modest decline in global inventories and around a seven per cent reduction in export availability. Similarly, global corn supply may fall by approximately two per cent, with inventories also projected to decline by about seven per cent over the course of the season.”

Importantly, Mr Vogel said, these forecasts are already well understood by the market and largely priced in. “At the same time, new uncertainties are emerging. With the Bureau of Meteorology now declaring a strong or very strong El Niño underway, questions are being raised among analysts. Such a weather pattern could bring drier conditions to Australia’s east coast and, with it, potential for lower grain yields that locally might see grain prices rise in the regions,” he said. “However, the impact might not be strong enough to move world market prices substantially higher. Parts of Southeast Asia may face even more severe dryness. These conditions could increase grain import demand in Southeast Asia and potentially a reduce palm oil production in 2027. In turn, this may provide some upward price support for vegetable oils as well as canola.”

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