Investing.com -- Jefferies has increased its 2026 commodity inflation forecast to 2.1% year-over-year, marking a 90 basis point rise from its April projection, according to the firm's latest commodity tracker released Tuesday.

The revised outlook reflects ongoing disruptions from Middle East tensions, with the Strait of Hormuz operating at approximately 5% of normal commercial traffic levels. The closure has elevated freight, rerouting, and insurance costs across multiple commodity categories including grains, oilseeds, fertilizers, and packaging materials.

Ceasefire negotiations broke down after the President rejected Iran's counterproposal on May 10, signaling limited prospects for a near-term resolution.

Excluding eggs, cocoa, and coffee, which are projected to decline most sharply, Jefferies' index indicates a 4.7% inflationary impact for 2026.

For the second half of 2026, 69% of tracked commodities are expected to show year-over-year inflation. Nonfat dry milk is projected to increase 45%, soybean oil 40%, hard red wheat 34%, and soft red wheat 22%.

The firm's first-half 2027 outlook points to a 1.7% year-over-year increase in input costs, representing a 110 basis point increase from previous estimates.

Fertilizer markets face particular strain, as roughly one-third of global seaborne fertilizer trade typically moves through the Strait. With Northern Hemisphere planting windows closing, extended periods of elevated fertilizer pricing raise concerns about reduced application rates and potential yield impacts for the 2026-27 crop year.

Egypt has already reported reduced expected wheat yields due to fertilizer supply disruptions.

Companies including Mondelez (NASDAQ: MDLZ), Nomad Foods, Hershey (NYSE: HSY), Post Holdings, Kraft Heinz (NASDAQ: KHC), and Utz Brands have noted the conflict as a source of rising energy, freight, and procurement costs, though most report limited direct impact currently.