Biofuels and Fertilizers: Why Agriculture and Energy Move Together Only at Times
Oil prices around $100 and the closure of the Strait of Hormuz have brought renewed attention to a link that seems obvious. If energy becomes more expensive, producing food also costs more. The data, however, tell a more nuanced story. Over the past seven years, agriculture and energy have moved together only at times, and for different reasons each time.
Today the link has become visible again, but it runs mainly through one specific product: soybean oil. Fertilizers, the most intuitive channel, work on much longer timeframes than markets do.
A Relationship That Comes and Goes
Correlation measures how closely two assets move together. It ranges from −1, when they always move in opposite directions, to +1, when they always move in the same direction. A value close to zero indicates independent movements. In our system we calculate it on daily price changes, over two horizons: the last 20 days, to capture recent changes, and the last year, to measure the structural link.
| Period | Energy / soybeans (20 days) | Agriculture / energy (1 year) | Context |
|---|---|---|---|
| June 2019 | −0.23 | 0.19 | calm phase |
| April 2020 | 0.10 | 0.39 | pandemic |
| March 2022 | 0.60 | 0.35 | invasion of Ukraine |
| June 2023 | 0.57 | 0.48 | no major shock |
| June 2025 | 0.49 | 0.18 | Israel–Iran war |
| March 2026 | 0.28 | 0.25 | start of the Iran conflict |
| August 2026 | 0.18 | 0.24 | one month ago |
| September 2026 | 0.46 | 0.26 | today |
The table shows three things. In calm phases the correlation is close to zero. Short-term peaks, between 0.5 and 0.6, recur roughly once a year, even without a crisis: June 2023 is the clearest example. The structural link reached its highest values between 2022 and 2023. Today, seven months into the Iran conflict, it sits in the lower part of its range.
These orders of magnitude are consistent with the academic literature. Studies point to a correlation of around 0.20 between crude oil returns and those of corn and soybeans, the crops used for biofuels.
The short-term signal should also be read with caution. Over 20 trading days, a correlation above roughly 0.44 is needed to rule out chance. The current value between soybeans and energy, 0.46, is only just above that threshold. It depends largely on four sessions in September when the two markets moved strongly together.
The Fast Channel: Biofuels Of all agricultural products, only one shows a stable link with energy: soybean oil.
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