Agricultural markets are keeping a close eye on the recent tragedies in Israel and the Gaza Strip to assess whether an escalation could have an impact on grain, energy and fertiliser prices.
Analysts agreed that while tragic, if the current hostilities were contained to the current area it would have very limited impact on the agricultural sector, however if tensions continued to rise and other important neighbouring Middle Eastern and northern African nations became embroiled it could have a more tangible impact.
Energy watchers are monitoring the impact on oil prices.
Crude oil prices rallied 5 per cent last Friday and if freight routes or oil producing nations are impacted this figure could rise further.
However, RaboResearch Australia New Zealand general manager Stefan Vogel said this did not necessarily mean that canola, closely correlated to crude oil in its pricing, would make a similar rally.
"Biofuel could benefit in some way, but a lot of the growth in that space is in North America and the prices are so much higher than conventional energy prices that it is not necessarily as closely correlated as you would think," Mr Vogel said.
"The biofuel boom has been driven not so much economically as politically," he said.
There has been a small rally in canola prices, both on the benchmark Winnipeg futures exchange but also in Australia cash prices, which now sit between $640 a tonne and $680/t for new crop product, but less than has been seen in oil markets.
Andrew Whitelaw, commodity analyst with Episode 3, said the agricultural issues would be felt if neighbours such as Lebanon or supporters of Hamas such as Iran got involved.
"The impact will be if there is contagion to the wider region," he said.
"For grain growers there is the chance grain prices could go up, but the threat of higher energy and fertiliser costs is probably the major consideration," he said.
"It's a very different situation to Ukraine where the two nations involved are big grain producers."
Mr Vogel said the conflict was likely to be a net negative for agriculture.
He agreed with Mr Whitelaw this unrest was different to the situation in Ukraine.
"The Ukrainian conflict was bad on cost in particularly fertiliser but was good on output prices, this time everything points negatively."
He said the disruption was unlikely to have a big impact on world access to critical Black Sea grain even if critical Middle Eastern freight routes, particularly the Suez Canal were impacted but added transport costs could rise.
"People need to eat, grain will still be moved, but maybe grain out of places like Russia and Ukraine will have to go the long way and there will be an increase in costs, but it won't result in there being no food."
"The same goes for Aussie canola heading to the EU, it is still likely to get there it just might be that more is swallowed up in freight costs."
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