Agricultural commodities look mispriced as fertiliser risk builds | Ruffer Investment Company

RICA

Jasmine Yeo, fund manager at Ruffer, argues that investors may be underestimating the impact of the Strait of Hormuz closure on agricultural commodities.

rica 1 (RICA)

Her point is direct. Oil has already moved sharply in response to the conflict with Iran, but crop markets have not. Wheat, corn, sugar and soybeans have lagged, despite the fact that the same disruption affecting energy markets also threatens the fertiliser supply chain.

Fertiliser is central to food production. The Strait of Hormuz is an important route for traded fertiliser feedstocks, including urea, ammonia, phosphate and sulphur. Urea and ammonia are especially important for nitrogen fertiliser, which is widely used on wheat and corn. If supply is restricted and prices rise, farmers face higher costs. They may reduce fertiliser use, cut planted acreage or accept lower yields. Any of those outcomes can tighten crop supply and push prices higher.

Yeo notes that the market’s muted reaction is partly explained by timing. Agriculture moves to seasonal buying and planting cycles, not simply to daily headlines. Northern Hemisphere spring planting largely used fertiliser bought before the latest escalation. That has delayed the impact on crop prices. The next key point is the Southern Hemisphere buying season, when farmers return to the market for nitrogen inputs. If the Strait remains closed into that window, fertiliser disruption could become harder for crop markets to ignore.

Oil has already priced in a meaningful geopolitical premium. Agricultural commodities may not have done so yet. That makes them potentially useful as a hedge against further escalation, persistent supply disruption and renewed food inflation. It also means the opportunity is linked to timing. The market may have a narrow window before fertiliser constraints become more visible in crop prices.

Yeo is clear that there are risks to the view. China has restricted urea exports and built inventories, and a return of Chinese supply could ease pressure. A resolution to the conflict and a reopening of the Strait would also reduce the disruption. Weather, crop conditions and seasonal demand will still influence prices.

Even so, her argument is that investors should not treat agricultural commodities as a secondary issue. They are directly exposed to the same geopolitical pressure that has already moved oil. The difference is that the pricing response has been slower.

Chart source: Bloomberg, data as at May 2026

Share on:
Find more news, interviews, share price & company profile here for:

Latest Company News

Ruffer Investment Company delivers positive 2026 returns

Ruffer Investment Company reported positive returns for the year to 30 June 2026, with a 5.5% share price total return and 4.6% NAV total return. Performance was driven by equity, gold and cash exposures, while the outlook highlights geopolitical risk, AI-led market concentration and a portfolio positioned for both growth and protection.

Ruffer Investment Company adapts to a more volatile market regime

Ruffer Investment Company is adjusting its portfolio strategy as unstable inflation, geopolitical risk and weaker traditional safeguards reshape global markets.

Private credit faces a critical test as consumer stress builds

Private credit growth has increased financial capacity, but consumer weakness and complex funding structures could determine whether the next downturn remains contained.

Gold’s changing market role reshapes portfolio positioning | Ruffer Investment Company

Gold’s renewed sensitivity to real yields is prompting Ruffer to keep direct exposure limited while retaining selective positions in profitable mining companies.

Market narratives are reshaping portfolio discipline

Market narratives are moving faster and influencing prices more directly, making valuation discipline, timing and portfolio resilience increasingly important.

How Ruffer’s CIO pair combine macro research and stock picking

Ruffer’s incoming Co-CIO Jon Dye brings a direct focus on risk control, valuation and independent thinking at a time when markets are shaped by debt, inflation and crowded positioning.

Search