WASHINGTON, D.C. (RFD NEWS) — President Donald Trump just extended his deadline for Iran to reopen the Strait of Hormuz by five days. The move comes just hours before the original deadline, with the United States threatening to target Iran’s energy facilities if the strait isn’t opened. The strait is a critical shipping lane for oil and fertilizer.
According to President Trump, talks with Iran have been “productive” so far, and will continue through the week. But, as time marches on, fertilizer shortages are becoming a key factor for farmers ahead of spring planting. Analysts say it is already shifting expectations for the year ahead.
Rabobank projects that U.S. farmers will plant nearly 96 million acres of corn and more than 83 million acres of soybeans this spring, largely unaffected by rising input costs. However, in other parts of the world, disruptions from the Middle East could hit hardest. Brazil, India, and Australia could limit crop expansion and reduce yields.
Analysts say those pressures are most likely to affect farmers with less access to credit, raising concerns for global food production and long-term supply.
The Middle East conflict is also creating an energy crisis, which is just ahead of the planting season, adding new pressure on farmers and markets. Trader Sam Hudson with Cornbelt Marketing says the uncertainty is driving up corn prices, especially for the new crop.
“There’s going to be a lot of, interest in [corn], mainly because of what you just mentioned — we knew demand was already good, and we knew this year was going to need to be a good production year— but when you throw this energy crisis on top, right ahead of planting, it definitely adds fears, all of that and increases the risk of all of it, too,” Hudson explains.
Hudson says these pressures could influence market spreads, depending on how planting and energy conditions evolve in the coming weeks.
“So, I would expect, in the short term, here we continue to see December Corn try to reach that $5 handle, at least on the new crop,” Hudson continues. “With all of this going on, I think that’s why I think, especially with some of this uncertainty about being in demand. You see corn gain on soybeans. I don’t know if we have to see all the markets rise, but I think soybeans still hold the greater risk. And for old crop inventories, too, I think this has maybe been an opportunity, ahead of the weather season, to kind of get caught up on sales, if you haven’t already.”
While farmers may not be changing acreage this spring, policy debates are heating up in Washington.
The Department of Energy is finalizing rules for the 45Z Biofuel Tax Credit, designed to reward lower-carbon fuels.
Ethanol leaders warn that the rules could exclude low-carbon farming practices such as cover crops, precision fertilizer use, and no-till. The American Coalition for Ethanol says that Republican lawmakers may need to press the Energy Department to ensure these practices earn credit.
The 45Z Credit calculates benefits based on a fuel’s overall carbon footprint, and including regenerative ag could mean billions for rural economies tied to ethanol production.
The National Corn Growers Association (NCGA) says its primary concern is now the ongoing tensions with Iran, specifically, fertilizer supply disruptions linked to the Strait of Hormuz, which the group calls particularly challenging
“We can manage phosphorus and products a little bit differently in that maybe we can cut our rates to get through a high-priced year to try and capture profitability,” says Matt Frostic. “But nitrogen is one of those things that if we cut even one unit of that product out, we’ll lose it — you know, a bushel of corn — so, it’s really hard to cut that product. And that’s the one element that has become extremely expensive in our inputs at this point.”
NCGA says there is already a lack of phosphate competition for farmers, and the situation in Iran makes it worse.
“In a typical year, the United States sources about 40% of imported phosphate products from Saudi Arabia,” Frostic continues. “When these fertilizers can’t be transported through the Strait of Hormuz, there are real implications for availability and price, and there is a global market impact.”
NCGA is strongly discouraging fertilizer companies from price gouging or using the conflict to discourage policymakers from taking steps to offset some of the price shocks.
Ethanol’s Growing Role in the Energy Crisis
Economic headwinds are prompting corn farmers to seek new market opportunities, with a renewed focus on the bioeconomy and expanded uses for ethanol beyond traditional on-road fuel.
Krista Swanson, Chief Economist for the National Corn Growers Association, joined us on Monday’s Market Day Report to discuss how the industry is adapting to current challenges.
In her interview with RFD News, Swanson outlined how the corn sector is repositioning itself to find new opportunities, particularly as growers face ongoing hurdles. She also discussed the role ethanol currently plays in corn demand and how future market development could expand opportunities for farmers.
Swanson explained the shift from ethanol as a liquid fuel to its use as a raw material, and what that transition could involve. She also highlighted the next steps needed to advance these efforts. Finally, she emphasized the importance of pursuing new sources of demand for corn, including opportunities in unexpected markets.
