Middle East conflict raises input costs but boosts grain prices, Bunge CEO says

The conflict in the Middle East is pushing up crop prices for farmers in the Americas even as it disrupts global trade flows, including those involving oil and fertilizers, according to Bunge CEO Greg Heckman.

U.S. and Israeli attacks against Iran have already led to the closure of the Strait of Hormuz, a strategic waterway for energy shipments and agricultural commodities.

The disruption has driven up prices for fertilizers and fuel, increasing pressure on farmers who are already facing a weak agricultural economy and tariffs that have limited access to key markets such as China.

At the same time, the Middle East conflict has lifted grain and oilseed prices, encouraging producers in North and South America to sell crops they had previously held back.

“They had the opportunity to sell because prices went up, and we had the opportunity to own more inventory,” Heckman said in an interview with Bloomberg News following the company’s investor day on Tuesday.

The dynamic could help offset some of the financial strain farmers may face if key inputs such as fertilizers and diesel remain expensive due to a prolonged conflict in the Middle East.

“We’re hearing from our customers in the trade that inventories are comfortable right now, but people are worried about the possibility that this could drag on for a long time,” Heckman said.

“So they start to worry about physical supply levels and ultimately about price.”

During Bunge’s investor day, Heckman said the company is now better positioned to navigate volatile trading environments following its merger with Viterra, completed in July.

“We are stronger, more agile and better positioned than at any point in our 200-year history,” he told participants.

“We can adapt quickly to any scenario, whether it’s the ongoing deglobalization we are experiencing now or a return to the globalization we enjoyed for more than two decades.”

Amid the turmoil in the Middle East, Bunge said it is relying on strategies similar to those used during the Russia-Ukraine war, including shifting the ports used for shipments and increasing the use of trucks and rail transport.

“You start rerouting logistics,” Heckman said in the interview.

The company took a similar approach last year when China stopped buying soybeans from the United States as part of trade negotiations with the Trump administration, he added.

“Remember, China didn’t stop buying — they stopped buying from the U.S.,” Heckman said. The country turned instead to Brazilian grain, forcing Brazil’s other customers to look for alternative suppliers, which allowed Bunge to redirect U.S. supplies to those markets.

“So you start matching origins and destinations to get the best possible outcome.”

Meanwhile, the CEO said Bunge remains hopeful that the United States will soon finalize its biofuels policy, which is expected to increase demand for oilseeds processed by Bunge and its competitors for renewable fuels and other products.

Heckman said the company has been working with trade associations and policymakers to help shape biofuel policies not only in the United States but also in countries such as Brazil.

“We want to help them achieve the final result with the fewest unintended consequences,” he said.

“We’ll tell them how markets work and how they will react. It’s our job to be the voice of reason.”

By Erin Ailworth for Bloomberg Línea

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