WASHINGTON, D.C. (RFD NEWS) — Corn and soybean prices have improved lately, but that has not done much to ease financial concerns in farm country. Diesel prices are surging as the fall harvest progresses, adding another layer of cost pressure for farmers during a critical time of year.
A new survey of 1,200 farmers by the National Corn Growers Association and the American Soybean Association found nearly two-thirds are moderately or very concerned about the farm economy.
Forty-six percent say they are more worried about their own finances than they were a year ago.
Corn and soybean groups say high input costs remain a major problem, leaving farmers with little room to absorb another increase in production expenses.
American Farm Bureau Federation (AFBF) economist Dr. Faith Parum joined us on Thursday’s Market Day Report for a closer look at the diesel market and what higher fuel costs could mean for farmers into 2027.
Refining Shortages Push Diesel Prices Higher
In her interview with RFD News, Parum said crude oil prices and diesel prices do not always move together.
“Crude oil is definitely an important input into diesel, but they don’t necessarily track 1-to-1,” Parum said.
She said global supply and refining capacity are also affecting the diesel market, with ongoing conflict in the Middle East, disturbances in the Red Sea and reduced refining capacity in Russia contributing to tighter supplies.
“We’re seeing overall refining capacity lower than what the world market needs,” she said.
Higher Diesel Adds to Farm Expenses
Parum said farmers are already facing difficult economic conditions following three to four consecutive years of a downturn.
Higher diesel prices are adding another expense that farmers may not be able to fully absorb.
“It’s making diesel and fertilizer, fuel prices, very expensive,” Parum said. “Even with rallying in the grain market, it may not fully cover the added expense of diesel and fertilizer since the conflict started.”
Diesel Export Restrictions Could Have Unintended Effects
Parum said efforts to restrict U.S. diesel exports could provide some short-term price relief, but she cautioned that an export ban would not address the longer-term supply problem.
“An export ban could really have unintended consequences,” she said. “It could change refiners’ decisions. It may bring prices down slightly in the short term, but overall it’s not a fix to the long-term problem here.”
She said farmers and ranchers would welcome actions from Congress or the administration aimed at lowering input costs.
Higher Input Costs Expected into 2027
Parum said the fuel market remains highly volatile, making it difficult to know how conditions will develop.
“Of course this is a very volatile situation, so everything could change tomorrow,” she said.
For now, she expects higher input costs to continue into 2027, including fertilizer, fuel and other production expenses.
She said stronger grain markets are helping offset some costs, but not all commodities are rallying the same.
“I imagine we’ll continue to see lots of price volatility and tight margins,” Parum said.
Harvest Leaves Little Room to Adjust
Parum said farmers have limited options to reduce the impact of higher diesel prices during harvest because fuel is necessary to keep equipment operating.
“It is just unavoidable,” she said. “Because we’re in the middle of harvest, you need diesel to run your equipment and your machinery. So you really have to just go ahead and accept that higher cost.”
Looking ahead to 2027, she said farmers will need to think about ways to manage continued volatility in fertilizer and fuel markets.
