Commodity ETFs May Feel Ripple Effects of Iran War

Group 1 - The majority of carbon in American bodies is estimated to originate from corn, highlighting the country's heavy reliance on this crop for various uses including sweeteners, fuel, and animal feed [1] - The closure of the Strait of Hormuz due to geopolitical tensions may disrupt the supply of nitrogen-heavy fertilizers essential for corn production, as there is no strategic reserve for nitrogen in the US [1] - Farmers are currently deciding whether to plant corn or soybeans, influenced by fertilizer availability, which could lead to a decrease in corn production and an increase in soybean planting [2] Group 2 - The current prices of corn are near production costs, with global supplies shrinking, but there is still a significant amount available [3] - Approximately half of the global food supply relies on synthetic nitrogen fertilizers, with a substantial portion sourced from the Middle East, indicating vulnerability in the supply chain [4] - Year-to-date, corn futures have increased by 5%, while soybean futures have risen nearly 15%, suggesting that the impacts of the ongoing conflict may not yet be fully reflected in market prices [4]