Even before the Iran war, Australian farmers faced concerns due to a forecast strong El Niño (drought conditions) and low wheat prices from a record 2024 global crop.

Some farmers were already considering moving away from wheat to more profitable or less water-intensive crops.

Farmers immediately knew the war meant diesel prices would soar. Prices jumped from ~$1.80 to over $3 per liter in less than a month.

Farmers purchase tens of thousands of liters; the price spike is a major cost burden. They also face uncertainty and high prices for nitrogen fertilizer needed for good yields.

Jeff Cosgrove is pivoting from his usual 60% wheat planting to prioritize canola, as it's more valuable and makes better use of expensive nitrogen fertilizer. He may leave some fields fallow.

Wheat requires nitrogen to be commercially viable. The decision to pivot happened within a month due to the war.

Price impacts will be unpredictable. Australia is somewhat insulated, but items requiring lots of diesel for transport (e.g., fruit/veg from Queensland) or specific fertilizers could become more expensive.

Uses the example of high global beef prices in 2025 not fully translating to Australia, and the 2023 butter price spike due to milk shortages.

The full impact won't be known until harvest (Oct-Jan). If Australia has a smaller wheat crop AND global production suffers (e.g., from El Niño effects in US, China, Brazil), competition for smaller supplies could raise prices globally.

Australia's main export markets (Middle East, SE Asia, China) currently have a glut from Argentina, Ukraine, and Russia. A shift could make staples like bread and noodles more expensive in SE Asia.

Yes, it's not zero-sum. Drier conditions and less wheat could boost pulses (lentils, chickpeas) for export to India, and barley for China. Some farmers may benefit.

There is strong demand from India (facing a bad monsoon) and China for these alternative crops.

Makes trading very difficult, causing confusion and hastily reversed bets on commodities markets. Prolonged war increases desperation for fertilizers, potentially leading to export restrictions and longer, unpredictable disruptions.

Cites India urging reduced fertilizer use and Asian countries considering export cuts. Notes the Strait of Hormuz closure's impact is more about natural gas than fertilizer for India.