EIA Forecast Signals Mixed Energy Cost Outlook Ahead

Fuel costs ease over the long term, but fertilizer energy remains volatile.

energy pkg.jpg

Market Day Report

NASHVILLE, TENN. (RFD NEWS) — Energy markets are sending conflicting signals to agriculture, with lower long-term fuel prices but continued short-term volatility in heating and fertilizer inputs.

The U.S. Energy Information Administration’s February Short-Term Energy Outlook (PDF Version) projects Brent crude oil averaging about $58 per barrel in 2026 and $53 in 2027 as global production continues to outpace demand and inventories build. Despite recent geopolitical disruptions, expanding output worldwide is expected to keep diesel and fuel costs generally softer over time.

Natural gas tells a different story in the near term. The Henry Hub price averaged $7.72 per MMBtu in January after winter weather tightened supplies. Storage levels are now projected to end winter about 8 percent lower than previously expected. Prices should moderate later as drilling increases, with averages near $4.30 this year and $4.40 in 2027.

U.S. natural gas production is forecast to grow 2 percent in 2026, while rising solar generation and modest coal use help meet expanding electricity demand from industry and data centers.

Lower propane prices are also expected as higher gas production boosts supply.

Related Stories
CoBank says beef-on-dairy is playing a major role in the changing market.
Soy Transportation Coalition’s Mike Steenhoek discusses how rising diesel costs affect grain delivery decisions and how farmers can use their free calculator to compare transportation costs and protect profitability.
USDA Selects Eight Projects Representing More Than $1.3 Billion in American Fertilizer Manufacturing Investment to Strengthen National Security and Support Farmers
Jess Peterson says January could bring a strong start if global pressures ease.

Tony St. James joined the RFD-TV talent team in August 2024, bringing a wealth of experience and a fresh perspective to RFD-TV and Rural Radio Channel 147 Sirius XM. In addition to his role as Market Specialist (collaborating with Scott “The Cow Guy” Shellady to provide radio and TV audiences with the latest updates on ag commodity markets), he hosts “Rural America Live” and serves as talent for trade shows.

LATEST STORIES BY THIS AUTHOR:

The special provision giving producers the higher of ARC or PLC for 2025 will not continue next year.
Higher shipping costs could make U.S. grain less competitive overseas.
Higher heating costs are putting added pressure on household budgets in rural communities.
The planned UAE facility could create a new annual export outlet for American corn growers.
Slower exports and stronger foreign competition are weighing on the U.S. pork sector.
AFBF Deputy Chief Economist Dr. Faith Parum says Title I commodity payment rates are expected in November. Producers should watch for USDA application details and contact local FSA offices.
More soybeans are being processed domestically as renewable fuels drive demand for soybean oil.
USDA’s new regional cattle report could give producers a clearer view of cash prices as negotiated trade continues to shrink.
Countries that buy American cotton could receive favorable tariff treatment on qualifying apparel.
Wheat remains closest to triggering a PLC payment as producers approach the December election deadline.
New and expanded rail lines could give Brazilian soybean and corn exports a stronger cost advantage.
Barge traffic improved, but grain movement continues to face higher transportation costs during harvest.