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
Dr. Gary Schnitkey from the University of Illinois discusses farmers’ sentiment toward industry consolidation, especially in the fertilizer sector, where costs remain historically high.
Weak cold chain performance can lead to slower movement, higher costs, and greater product loss after harvest or processing.
K-State economists say big swings in cattle futures can complicate hedging, margin calls, and timing of sales.
The dairy industry is encouraged by potential H-2A reforms while supporting renewal of the USMCA.

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:

To qualify, land must be in the U.S., used substantially for farming in the last 10 years, and restricted from non-farm use for at least 10 years after the sale.
USDA says total grain inspected for export reached 2.81 million metric tons for the week ending June 11.
The Natural Resources Conservation Service says drought resilience starts before the next rainfall shortage.
Purdue data show stronger net returns for organic corn and soybeans despite lower yields and higher costs.
The agreement is expected to formally take effect on Friday, and markets will continue watching for signs that shipping traffic and global energy flows are returning to normal.
The agency also plans to strengthen workforce culture and modernize infrastructure and technology.