Any benefit from the ceasefire between Iran and the US could take many months to be felt, trade and commodity experts have warned.
The fragile, two-week ceasefire to the Iran conflict on Tuesday came within hours of Donald Trump threatening “a whole civilisation will die tonight” if Iran failed to meet US demands to reopen the Strait of Hormuz.
At the time of writing on Thursday, the pause in hostilities remained tentatively in place, despite continued Israeli air strikes in Lebanon and growing disagreements between Washington and Tehran over the ceasefire’s scope and enforcement.
Regardless of whether it can bring a lasting end to the conflict, any hope of a “flick of a switch” return to pre-war trade flows would be premature, said Chartered Institute of Export and International Trade director general Marco Forgione.
The ceasefire had been a “great relief”, bringing “cautious optimism”, Forgione told The Grocer. But there was “an awful lot that now needs to be unwound in order for global supply chains to get back to where they were”, he added.
Alongside questions around whether the pause would hold, it was not clear how the ceasefire will be implemented in practice, Forgione pointed out, amid reports of Iran planning to charge at least $1m to guarantee the safe passage of every vessel that passes through the vital waterway.
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His comments were echoed by Shannon Behary, EMEA editor at price reporting agency Expana. Shipments of critical commodities such as urea for fertiliser production could continue to see long-term disruption, she warned.
“Physical safety of passage needs to be demonstrated, insurance rates on ships need to come down, and logistical backlogs have to be worked through,” she said.
Fertiliser production would also “take time to restart, both in the Gulf, where there is physical infrastructure damage to deal with, and in other parts of the world, which are dependent on exports from the Gulf for their energy or for inputs like sulphur”, Behary added.
Price volatility for a host of other commodities such as feed additives and wheat was also likely to remain high, Expana said.
It comes as new research published by agricultural consultancy Andersons on Thursday revealed so-called agflation for UK farmers had jumped by 7.6% year on year in March – the fastest rise since the start of the Ukraine war in 2022, following the outbreak of the conflict on 28 February.
At the same time prices for agricultural outputs, or the cash paid to farmers for their produce, was falling by 6.5% year-on-year.
This led Andersons to warn of a “clear ‘cost of farming’ squeeze”, that would ultimately drive up food price inflation.
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