EXCLUSIVE 'We're Past Risk-This Is Real Disruption': Teucrium CGO Says As War Fuels Food Inflation Fears

The U.S.’s war in Iran could spike food prices, Jake Hanley, Chief Growth Officer, Director of Investments at Teucrium ETFs, told Benzinga.

That’s because higher crude oil costs affect farm operating costs. As a result, investors are piling into agriculture-focused ETFs tied to corn, wheat, and soybeans. "The linkage runs through three channels, and right now all three are firing simultaneously," Hanley says.

Trading volume in the Teucrium Corn Fund (NYSE:CORN) and Teucrium Wheat Fund (NYSE:WEAT) rose to their highest level in a single day since 2022 on March 6.

"Energy is a direct farm input: fuel for equipment, natural gas for fertilizer, diesel for logistics," Hanley said. "When crude runs, farm operating costs run with it. That's a price floor getting repriced across every row crop."

Biofuel Demand Lifts Corn, Soy Markets

Additionally, higher oil prices are increasing demand for biofuels, which directly impacts the prices for corn and soybean oil.

Hanley pointed out the fact that the corn used for ethanol alone absorbs about 37% to 38% of the U.S. total crop supply. And soybean oil has become a major feedstock for renewable diesel production.

"Both commodities now carry a demand floor tied to energy policy that didn't exist 15 years ago," Hanley said. "When crude spikes, that floor rises with it."

Investors seeking exposure to soybean markets have also turned to funds like the Teucrium Soybean Fund (NYSE:SOYB).

Fertilizer Shock Raises Supply Risks

Meanwhile, disruptions around the Strait of Hormuz are tightening fertilizer supply chains, potentially affecting crop production in the coming seasons.

"We're past ‘risk.' This is real disruption," Hanley said, noting that fertilizer prices have already jumped significantly as production facilities scale back output. “Qatar Energy shut down production at the world's largest single-site urea plant after losing its LNG feedstock. Three Indian urea plants have already reduced output. Urea jumped roughly $80 per ton from pre-war levels, and the Hormuz closure hasn't fully worked through supply chains yet,” he added.

Corn may be particularly exposed because it requires large amounts of nitrogen fertilizer.

"If farmers cut acres or cut application rates in response, that supply reduction doesn't show up in this year's price," Hanley said. "It shows up in next year's yield."

With Northern Hemisphere planting season approaching, investors are now watching crop reports and fertilizer markets closely for signs that tightening supply could push agricultural prices even higher.

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