How the Hormuz crisis drives energy crops and aggravates the food emergency

We have already written about it: this new shock, after the inflationary shock caused by the attack on Ukraine, in addition to triggering a humanitarian crisis, risks creating political extremism and new waves of migration towards Europe.

It obviously adds to the short-sighted suspension of the dismantling of Usaid.

The countries of the Horn of Africa are the first to be affected by a possible famine. And in fact Tajani has called for a ‘humanitarian corridor’ for fertilisers from Hormuz….the main objective is the rapid restoration of the flow of fertilisers and other essential goods, considered crucial to averting a possible worsening of food insecurity, with particular reference to the African continent

This crisis is aggravated by three factors:

1.energy: sugar, maize and oilseeds such as soya, rapeseed and sunflower are taking the place of food and feed grains. FAO: the world is on the eve of a global food catastrophe that will hit the most fragile areas first…

In Brazil and other large producing countries, high oil prices have already diverted sugar production to energy uses. After losing 40 per cent over the past two years, the sugar price index has risen 7.2 per cent in the past month, according to the FAO, taking quotations back to their highest level since November 2025. With oil more expensive, expectations for demand developments in the non-food circuit, particularly for biodiesel production and other energy uses, have improved.

Brazil is the world’s leading producer and exporter of sugar and a substantial part of the cane harvest will be diverted to the ethanol supply chain, which is widely used in road transport.

In the US, a survey by the USDA, the Department of Agriculture, indicates an imminent shift in sowing towards soya at the expense of spring wheat, which is more in need of fertilisers.

2.fertilisers: global fertiliser supplies are being reduced by the almost complete closure of the Strait of Hormuz, which before the conflict handled up to a third of globally traded nitrogen fertiliser exports, while reduced gas flows have reduced fertiliser production elsewhere.

We have already discussed this here.

3. finance: hedge funds are betting on biofuels to profit from the Iranian oil price shock. Market participants expect corn and soybean prices to soar as demand for alternative fuel sources increases.

Below: the two graphs show the surge in maize and soybean investments.