WASHINGTON, D.C. (RFD NEWS) — New developments in the war in Iran are adding fresh uncertainty to global energy markets—and that volatility is quickly spilling over into American agriculture. In an address to the nation, President Donald Trump said the U.S. is making progress in the conflict but offered no clear timeline for ending military operations. He indicated strikes against Iran could continue for the next two to three weeks.
At the same time, there is still no timeline for reopening the Strait of Hormuz, a critical global shipping corridor that has remained closed since the conflict began.
Oil Prices Surge, Fuel Costs Climb — Fertilizer Costs Add More Pressure
Energy markets reacted swiftly to the uncertainty. West Texas Intermediate crude was trading near $97 per barrel as Trump began his remarks, but climbed above $100 by the end of the address. Prices have reached as high as $108 per barrel this week, while diesel prices are also trending higher than $5 per gallon, according to AAA.
Researchers at Kansas State University say those increases have real consequences on the farm. They warn that once oil reaches $90 per barrel, farmers and ranchers begin facing significant increases in production costs. A $1 increase in diesel could raise seasonal fuel expenses by as much as $10,000, with the average Kansas farmer already spending around $30,000 annually on fuel.
Fuel is only part of the equation. Economists say fertilizer costs—many of which are tied to global supply chains—could have an even greater impact.
Current estimates show fertilizer prices up roughly 10 percent, which could add about $12,000 in expenses for the average grain farmer this season. Supply constraints are also a concern, as many fertilizer shipments rely on overseas transport routes that are affected by the closure of the Strait of Hormuz.
Dr. Faith Parum with the American Farm Bureau Federation (AFBF) joined us on Thursday’sMarket Day Report to provide insight into the latest developments in global trade impacting decision-making across American agriculture.
In her interview with RFD NEWS, Parum discussed what stands out in the USDA’s Prospective Plantings report, including shifts in intended acreage across major crops.
“We’re seeing some shifts across the countryside, and we’re seeing the South really increase their corn and soybean acres and moving away from rice acres,” Dr. Parum explains. “We’re also seeing a general shift to more soybeans. That makes sense, as we saw a pretty record corn crop last year, but also with fuel and fertilizer volatility, it makes sense to switch from a more nitrogen-intensive crop to soybeans, which is a little bit less fertilizer-intensive.”
Parum notes that because the report is based on early-March survey responses, acreage could still change as planting progresses this spring.
“This is an intention of farmers, so they take this in early March, sort of end of February,” Parum says. “And so, since the conflict in Iran has continued and we’ve seen fertilizer prices continue to rise, we may see farmers continue to shift their plans and maybe move more and more toward soybeans or other commodities.”
Finally, Parum addressed the ongoing volatility in fertilizer markets and explained how higher input costs are affecting farmers’ margins and potentially influencing planting decisions.
“We’re staring down another down farm economy, and seeing estimates of more losses to come in the year,” she said. “With fuel and fertilizer prices continuing to increase, and production expenses overall continuing their trend of increasing, we’re going to continue to see tight and negative margins across the farm economy.
Parum emphasized that, with fertilizer prices up 30 to 40 percent in some regions — and even more so, with diesel prices up 40 percent — high input costs are really going to make it tough this year for row-crop farmers.
Acreage and Yield Uncertainty Ahead As Concerns Grow Over Corn Yields
The U.S. Department of Agriculture (USDA) recently lowered corn acreage expectations by three percent from last year. Now, traders are weighing the USDA’s newly released Prospective Plantings Report, though many say it is too early to know how those numbers will ultimately shake out.
“We’ll see how things actually size up when we get to the end of June, when we get the actual acreage number, right? So, post-USDA report, you got corn and soybeans, like I said, swapping those acreages,” said Bob Mauer. “But really going forward, any final decisions when it comes to acreage that’s in the margins there, where there hasn’t already been a commitment, a general commitment to actually plant those acres, and there could be some change. It’s going to be based on the weather. It’s going to be based on market prices, and it’s going to be based on fertilizer prices and fertilizer availability. So there’s a lot of uncertainty still over the next 120 days, 90 days. Let’s put it that way.”
Mauer added that planting decisions will likely need to be finalized within the next month. With input costs elevated, some economists are warning that production could suffer.
“If those numbers hold, then I think you really have to start wondering about the national yield in the corn, because I think we will see some cutbacks on inputs,” said Mike Zuzolo. “And so, my numbers are going to stay below 180 national yield for corn until I see the all clear with the energy markets and the Strait of Hormuz.”
Despite the decline in corn acreage, that figure still came in higher than many analysts had anticipated. Economists are continuing to analyze key USDA reports released this week, as farmers also navigate volatile fuel and fertilizer markets heading into planting season.
Farmer Sentiment Turns Negative As Borrowing Costs and Tight Margins Persist
A new farm survey from the Southern Cotton Ginners Association highlights growing concern across the ag sector. Polling attendees at this year’s Farm and Gin Show, the group found:
- 52 percent expect to be in a worse financial position within two years
- Fewer than 10 percent report a positive outlook
- More than 75 percent believe U.S. agriculture has lost competitiveness in the past five years
Producers cited Brazil’s lower costs, fewer regulations, and larger production scale as key challenges. More than 80 percent identified commodity prices as a major issue, while 60 percent pointed to input costs as the biggest squeeze.
While borrowing costs have shown slight improvement, economists at the University of Arkansas say they remain well above pre-2022 levels. Per-acre expenses have declined modestly—by about $4 depending on the crop—but those savings are largely being offset by higher input costs.
Analysts say markets are reacting not just to geopolitical tensions but also to shifting weather patterns.
“Prices may stabilize here for a while at least till we get the crop in the ground, but you can see markets are very sensitive to swings in crude oil, and even a change in the weather forecast from one day to the next has pressured wheat prices by 15 cents,” said Brian Hoops. “It was expected that some of those dry areas of western Kansas, western Oklahoma, and Texas would not receive very much rain. Those models have shifted now to allow more rain opportunities for those really dry areas.”
