When the US and Israel went to war with Iran in February, there was an economic shock to oil prices, but the impact was less than was the case four years earlier when Russia invaded Ukraine.
There is no single explanation for this, but the fact that Europe, in particular, had to transition from Russian gas meant that the outbreak of conflict in the Middle East, while disruptive, was less drastic than might have been expected.
While stalemate prevails in the Middle East, the conflict between Russia and Ukraine has taken an additional twist in recent months that has the potential to affect Irish farmers.
Over recent months, Ukraine has focused on striking Russia’s energy production capacity, which has led to scarcity of fuel on the streets.
Russia has now responded by attacking shipping of Ukrainian grain in the Black Sea, which isn't an entirely new development, as it also happened at the start of the war.
However, a sort of agreement was brokered that enabled commercial shipping proceed relatively undisturbed until recently.
Grain trade impact
Russia has adopted the tactic of hitting Ukraine’s grain exports as their contribution to the Ukrainian economy is comparable with what energy is to Russia’s.
Ukraine is also attacking Russia’s grain shipments, so the damage is mutual. All of this has meant that grain prices have been climbing over recent weeks, having been depressed for a prolonged period, as Irish tillage farmers are all too aware of.
Wheat prices have now climbed to a three-year high and the volume of exports from both countries accounted for a combined 24.2% of global trade for wheat, maize and barley combined between 2022/23 and 2024/25 marketing years, according to the Food and Agriculture Organisation (FAO) of the United Nations (UN).
A sustained increase in grain prices over the coming months may be too late for Irish tillage farmers this year, but it would cause higher feed costs for dairy and livestock farmers.
The timing of higher feed costs could hardly be worse, as many farmers have already been feeding more meal to offset the lack of grass in drought-affected areas.
What’s more, the drought has caused many farmers to break into their winter fodder supplies, which will require more meal being fed over winter months in an attempt to stretch them out until next year's grass arrives.
Fuel and fertiliser
It isn’t just feed costs that look like they will be a problem over the coming months.
The effects of higher diesel costs have already been felt over recent months and there is no indication that these will ease anytime soon.
Aside from the disruption to supplies from the Middle East, the successful targeting of Russian fuel depots by Ukraine has meant that instead of producing their own, they too have been seeking fuel to import, creating further competition for reduced global supplies.
As for fertiliser, Irish farmers were in a relatively good position with stocks going into 2026 because of advance buying ahead of the carbon border adjustment mechanism (CBAM) tax, which was introduced on 1 January.
Gas is a key ingredient in fertiliser manufacture and prices have been increasing recently and while they are nowhere near the levels they reached after the Russian invasion of Ukraine, they are more than double what they were this time last year.
Going into 2027, fertiliser may well have the double whammy of CBAM plus very expensive gas.
There is no good news in this for Irish farmers, even in the tillage sector, as higher fertiliser and diesel prices will eat up much of any extra they get for crops in 2027.
Livestock farmers face the prospect of higher costs against a backdrop of 2026 beef and dairy prices running well below last year's levels and, recently, lamb prices have dipped behind last year too.
With all production costs on the increase and sales revenues falling, it is shaping up to be a tough winter for Irish farmers, even if prices turn upwards.
Grain Trends: prices up to highest in a month