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Crop prices around the world are at their highest level in two years as the ongoing war in Iran and extreme weather roil farm products and increase input costs such as fertilizer.

The prospect of smaller harvests for key crops such as corn and soybeans is driving food inflation around the world.

The Bloomberg Agriculture Spot Index, which tracks 10 of the world's top-selling crops, has climbed for a third straight month and reached its highest level since November 2023.

Farmers from Australia to the U.S. are grappling with challenges that include everything from drought to higher fuel costs, impacting prices for food staples ranging from pasta to cooking oil.

Wheat and corn, both fertilizer-intensive crops, are among the most affected. Benchmark wheat futures traded on the Chicago Mercantile Exchange have surged 12% since the Iran war began in late February.

Corn's price has climbed 6% in the past two months to reach its highest level in a year. Some farmers in major producing countries have had to reduce planting corn to cut costs.

At the same time, drought in the U.S. Midwest is driving up wheat prices, while severe weather is causing concern in other major producing nations such as Australia and Russia.

Soybean oil prices in Chicago have surged about 50% this year to hit their highest level since 2022, lifted by stronger U.S. biofuel mandates and the rise in energy prices.

The Iran war also risks keeping fuel and freight costs elevated for commodities such as coffee and cotton. Higher diesel costs are pushing up the expense of moving crops from farms to ports

Commodities analysts say the situation with crop prices is likely to worsen this summer before it gets better.