How the Iran conflict pushed Atlantic grain freight to a four-year high

Atlantic grain freight costs have undergone their most significant three-week escalation since the Russia-Ukraine crisis of 2022, as the outbreak of US-Israeli military action against Iran sent bunker fuel prices higher and disrupted key shipping routes. The following article, reported by Fastmarkets price reporters across late April to early May, documents the escalation as it unfolded.

Week of 27 April

Freight rates on Panamax-sized vessels on the Atlantic Ocean fell slightly in the week to Wednesday April 29 but remained at high levels.

Rates on the Brazil-Northeast Asia route were stable at $51.20 per tonne, while rates on the US Gulf-Northeast Asia route declined by $0.50 per tonne to $68.80 per tonne.

Pressure from supply was identified as a reason for slight falls in US Gulf rates.

“The North Atlantic market is weakening due to a tonnage overhang in the continent, while the South is performing better, as Southeast Asian markets are attracting more tonnage these days”, one broker source told Fastmarkets.

Strong demand for tonnage in Southeast Asia was linked to very strong coal loadings on Panamax and Kamsarmax vessels in the Indo-Pacific region in recent weeks at that time.

This demand had slightly shortened supply in the South Atlantic and thus supported rates from Brazil to Northeast Asia.

The high cost of bunker fuels also remained an important driver in the market. “The fuel crisis is still very much a reality,” the broker source told Fastmarkets, adding that the crisis is “less pronounced” for “shorter voyages without long ballast legs exposing bunker purchases to greater price volatility between bunkering and loading.”

This preference for shorter voyages may also have supported tonnage shifting to intra-Asian coal routes.

Meanwhile, support from Atlantic exports should remain relatively strong amid higher exports estimates.

Brazilian soybean exports were projected to hit 15.87 million tonnes in April, compared with 13.5 million tonnes in April 2025, the most recent data from Brazil’s National Grain Exporter Association (ANEC) showed.

Meanwhile, there was little change in the Black Sea region in the week ending April 29.

The grain trade was generally slow in the whole region, with the biggest purchase reported for Saudi Arabia’s state buyer, which picked up 985,000 tonnes of 12.5% wheat for June-August shipments. Although origin is optional, sources expected it to be sourced mainly from the Black Sea region, given the purchase’s price of $276.70 per tonne CFR.

Fastmarkets heard that the freight idea for Panamax vessels loading at Constanta/Burgas was estimated around low to mid $30s per tonne, while for Russia loading cargoes the ideas ranged $36-40 per tonne.

With price increases for some of the key wheat origins worldwide, Black Sea wheat started to look more attractive, though the demand into Asian destinations remained low, according to sources.

Panamax ideas for wheat loading from Ukraine to Indonesia were heard at a wide range, with some sources indicating low $40s per tonne with good discharging terms, while others said high $40s per tonne was more likely.

Meanwhile, same-size cargo loading from CVB ports with good terms was indicated at $39 per tonne.

A trade related to Algeria’s wheat tenders, signed earlier, showed freight ideas around $33 per tonne for Ukraine loading, while ideas for loading from Constanta were heard at $24 per tonne.

The Turkish demand for corn slowed during the week, while the FOB and domestic Ukrainian prices remained firm. Fixture was heard for Handy-size vessels into Marmara ports at $19.50 per tonne, largely stable week on week.

The Egyptian demand for wheat and corn from the Black Sea was thin during the week. As a result, freight ideas for Handy-sized vessels were unchanged at $24-25 per tonne for Russia or Ukraine ports of loading.

In the shallow-water sector, Russian coaster rates continued to decline and stood at $37-38 per tonne on the Azov-Marmara route. A few trade sources, however, said they expected a drop to $34-36 per tonne in the next few days amid slow trading and anticipation around the Turkey’s potential wheat import ban.

Week of 4 May

Freight rates on Panamax-sized vessels on the Atlantic Ocean showed renewed rises in the week to Wednesday May 6 when tonnages tightened on strong demand for cargoes.

Rates on the Brazil-Northeast Asia route rose by $2.80 per tonne to $54.00 per tonne, while rates on the US Gulf-Northeast Asia route went up by $1.95 per tonne to $70.75 per tonne.

Trade sources told Fastmarkets that the rises this week were largely due to tightening of tonnage while cargoes drew in any spare supply of shipping.

In particular, the North Atlantic market continued to see tonnages shrinking with ships sucked-in by the high volumes of cargoes leaving South America when Brazil hit a peak in its export program.

“There are plenty of cargo volumes around, especially in the East and the South Atlantic,” one broker source told Fastmarkets, adding that ships were being “attracted” by trade originating from the North Coast of South America (NCSA) and the East Coast of South America (ECSA).

Fresh data for May 2026 was not yet available, but the month normally sees a high level of Brazil-origin exports. For example, 14.2 million tonnes of soybean exports were shipped by Brazil in May 2025.

Some trade sources had previously noted a risk that vessels were becoming wary of routes such as Brazil-Northeast Asia, which involved long ballast journeys, due to the high costs of fuel, but it is understood this had been allayed in recent weeks by a stabilization in bunker fuel prices.

Meanwhile, the freight market had not yet reacted to developments in the Iran-US negotiations on May 6, with participants preferring to wait for the outcome before responding.

“The freight market seems to have its own gods at the moment,” the first source said.

In theory, a settlement in the Middle East could bring a drop in freight rates, which have soared to multi-year highs during the war, because a return to normal trade flows in the Persian Gulf would help to reduce the cost of bunker fuels and to improve general sentiment.

“Perceptions around supply scarcity will change,” a broker source said.

On the other hand, however, another failure to achieve agreement in negotiations, and an intensification in the US campaign, could see the market put under further stress, after bunker prices had found stability.

The Black Sea freight market was broadly steady to slightly softer in the week to May 6, even with trading movements reported to be thin across the region.

Following a big Saudi Arabian purchase in the week to May 1, this week another big state buyer in Algeria’s OAIC has entered the market and picked up at least 390,000 tonnes of 11.5% wheat for July shipment, paying $268-270 per tonne CFR.

Trade sources expected the tender to be covered mainly from Ukraine, Bulgaria or Romania, with freight costs estimated around $33-35 per tonne for 30,000 tonnes loaded from Ukraine, and around $28-31 per tonne for loading from Constanta/Varna/Burgas.

In terms of other destinations in North Africa, Egypt was completely absent from the market, with trade sources saying that for now its needs were well covered. The freight rate for the Ukraine-Egypt route for Handy-sized vessels was indicated at $24-25 per tonne, while from Constanta it was heard at $19-20 per tonne.

Ukrainian corn demand remained thin, with only a few bids heard, specifically for Turkish destinations but, along with some short-covering heard in the market, that was enough to push the domestic and FOB indications up during the week.

Meanwhile, the freight indication for Handy-size cargoes into Marmara ports was indicated at $18.50-19.00 per tonne, a small decline from last week.

Along with that, prices remained firm for several key global wheat origins usually traded into Asian destinations, with a few trades heard done into Indonesia in the mid $40s per tonne, for loading from Ukraine ports, and at $39-low $40s per tonne for Bulgaria loading.

In the shallow-water market, Russian Coaster rates on the Azov-Marmara route continued to move downward, with some trade sources saying it was $35-37 per tonne, while others indicated that it had dropped to the low $30s per tonne. But given that trade activities in the region were muted, it was hard to determine which levels were more realistic.

Week of 11 May

The fallout from the war in the Persian Gulf between the US and Iran had seen key Panamax vessel cargo rates reach their highest levels since the commodities crisis that followed the Russian invasion of Ukraine in 2022.

The US Gulf-Northeast Asia freight rate was assessed at $70.75 per tonne on Wednesday May 6, its highest level since July 2022.

The Brazil-Northeast Asia reached $54 per tonne, close to its wartime highpoint of $54.30 per tonne on March 18, which was the highest level since August 2022.

The US Gulf-Northeast Asia route had seen a total price increase by 33.5% since the war began at the end of February, while the Brazil-Northeast Asia route had seen a rise of 27%.

Most of these rises occurred immediately following the opening actions in the war between the US and Iran, with the US Gulf-Northeast Asia route rising by 30% in the first month of the war and the Brazil-NEA route rising by 23.5% in the same period.

Atlantic freight rates had reached a plateau at their historically high levels since then, and have oscillated around similar prices.

Fastmarkets understands that the primary driver for the large increases in Panamax freight rates has been strong rises and volatility in the cost of bunker fuels used to power bulk vessels.

Like many similar vehicle fuels such as diesel or jet fuel, bunker fuels are heavily dependent on exports from the oil- and gas-rich regions bordering the Persian Gulf.

Much of this capacity has been lost to the world market since the shipping bottleneck at the Strait of Hormuz was effectively closed by the war.

Despite initial panic in the early stages of the war at key bunker hubs such as Singapore, Fastmarkets understands that bunker fuels have not shown shortages of the kind that have begun to be a concern for jet fuel.

But prices have strongly increased and, more damagingly, have also shown a great deal of volatility due to uncertainty about how long the war would continue.

A Very Low Sulfur Fuel Oil (VLSFO) index at 20 bunkering locations kept by sector data provider Ship & Bunker averaged $898 per tonne in March, up by 65.2% from February.

The VLSFO index then eased slightly by 2.4% to average $890 per tonne in April.

Research consultancy Drewry was quoted in April with similar estimates of 60-80% rises in bunker costs since the beginning of the war.

Most of this cost has been absorbed by the market in higher rates, with little retained in the form of earnings.

“Headline freight is higher, but a big part of that is bunker pass-through, not stronger net earnings,” Yiannis Parganas of Intermodal shipbrokers told Fastmarkets in April.

Volatility in fuel prices, stemming from energy volatility and constant shifts in the political situation, have also been damaging for the freight market.

This was because uncertainty around the direction of bunker fuel prices has at times made it difficult for counter-parties to reach an agreement and thus has suppressed market activity.

For example, after the first round of direct US-Iran negotiations in Pakistan failed on April 12, uncertainty was such that “many traders are now trying to avoid any shipment that [they] could delay, in order not to bear any further rise in bunker prices,” according to one Fastmarkets source.

Another risk for the freight market was that sustained high bunker prices could damage the willingness of shipping to service certain routes.

At one point in late April, one broker source warned Fastmarkets that high bunker costs were discouraging ships from committing to the long Brazil-Northeast Asia journey.

“Few seem willing to commit to long ballast voyages until there is greater clarity on oil and bunker pricing,” the source said.

This has since been overcome by a combination of some stability in bunker costs and strong demand for ships while Brazil’s soybean export season ramps up. But it is a warning sign of how high fuel costs arising from the war could begin to warp the freight market.

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