The fuel crisis is the part of the Hormuz shock everyone can see, but the bigger and longer lasting hit is to food, and it is already being locked into the 2027 grocery bill by planting decisions being made on Australian farms right now.
🌾 Rabobank forecasts Australian wheat plantings to fall 20.4% YoY
🌾 Total winter crop area is set to shrink 8%, well below the five year average
🌾 Total wheat harvest is forecast to fall close to 50%
🌾 Queensland crop area is down around 35% and NSW around 29% on dry conditions
🌾 Wholesale urea is up around 70%, with the retail price farmers actually pay closer to double pre-conflict levels
🌾 Fuel and fertiliser together make up close to a third of a crop farmer's costs
🌾 The FAO global food price index rose 2.4% in its latest read, a third straight monthly rise
Here is the thing about food that makes it different to fuel. Fuel reprices in days. Food moves on the crop calendar. Australia's winter crop goes in the ground between roughly May and July and comes off from October through to January. That grain then mills and processes over summer and lands on supermarket shelves through the first half of 2027. The fertiliser a farmer can afford to spread and the diesel they burn at sowing this quarter set the yield for that entire crop. Costs locked in at sowing cannot be unwound later in the season. So the price of bread, pasta, and feed driven meat in 2027 is being decided over the next eight weeks.
And this is the part that matters for planning, because it does not depend on how or when the war ends. Even if the strait reopened tomorrow, the global fertiliser supply chain cannot restock, ship, and deliver in time for this sowing window, and the planting decisions would already be made. Farmers facing urea at close to double the price are simply using less of it and switching to lower input crops like barley and canola, which means lower yields locked in across the board. Australia is more exposed than most because we lean heavily on Middle East fertiliser imports. Layer a likely El Nino and the dry conditions already hammering the east coast on top, and Rabobank's near halving of the wheat harvest starts to look less like a worst case and more like a base case. The point of no return is the planting window closing around July. After that, the 2027 shortfall is set no matter what the diplomats do.
There is also a structural sting in the tail. The risk and freight premium now attached to anything moving through or sourced near the Gulf is unlikely to fully unwind the moment traffic resumes. Insurance, rerouting, and a loss of confidence in the route tend to persist, which means a higher cost base for fertiliser and the food grown with it well after the acute crisis passes. For any business with food in its cost line, hospitality, food retail, food manufacturing, the message is the same one I have been giving on fuel. Do not build your 2027 forecasts around the war ending. The fuel shock might ease quickly when the strait reopens. The food shock will not, because it is already in the ground.