SHELBY COUNTY, OHIO (RFD NEWS) — Oil markets are showing signs of relief after a volatile stretch tied to the ongoing war with Iran, but fertilizer prices and input costs continue to weigh heavily on farmers across the country.
Brent and WTI crude oil prices were both trading below $100 a barrel, as of 8 a.m. ET on Thursday, after surging earlier this week following escalating tensions in the Middle East. Markets reversed course after President Donald Trump announced progress in negotiations with Iran and paused “Project Freedom,” the U.S. military effort aimed at moving ships out of the Strait of Hormuz.
Diesel prices, however, remain elevated. According to AAA, the national average for diesel held steady Thursday morning at $5.67 per gallon. That is unchanged from the previous day, but still up from $5.49 one week ago.
Iran is reportedly reviewing a U.S. proposal and is expected to respond to mediators sometime today.
Meanwhile, fertilizer supply chains remain under pressure as the Strait of Hormuz remains effectively closed to normal shipping traffic.
StoneX Vice President of Fertilizer Josh Linville says safety concerns are preventing vessel operators from moving product through the region.
“You can say something’s open, but if the industry isn’t comfortable with the safety of what they’re doing, they’re not going to go ahead and open or close — it doesn’t matter if there’s nothing flowing through, and that’s what it’s really been,” Linville told RFD News. “These vessel owners have got a very, very difficult decision to make. They want to be moving. That’s how they make money. There are loads to be hauling. They know they need to do their job. But if you think about it, if you own this vessel, that vessel is worth millions upon millions of dollars. As a massive investment, it is a glaring target in a very narrow body of water. But worse, if you sail that ship, it’s bad enough to lose that investment. It’s worse if you have to call families and say, I’m sorry.”
Linville says current fertilizer prices still have not reached the peaks seen in 2022, but lower grain prices are making the situation more painful for producers.
“We have seen higher prices in the past. This is not the highest price we’ve ever seen for phosphate, urea, or UAN,” Linville continued. “The issue is that the grain prices have done nothing to reflect any of this. All of these prices are still very, very cheap, and that’s what’s pinching this farmer. You go back to like 2022, and prices were higher, but they were getting so much more for that grain. It could help offset that situation. Well, now the fertilizer prices are extremely high, and on the flip side, the grain markets are like, ‘That’s not our problem. That’s your problem,’ because at the end of the day, these markets are ruthless.”
DTN fertilizer data show prices continue to climb, although gains have slowed compared to recent weeks. UAN-28 and UAN-32 are both up 6 percent over the last month, while anhydrous ammonia has gained 5 percent. Year over year, urea prices are up 45 percent, and anhydrous prices are up 43 percent.
The uncertainty surrounding the war is also creating major swings in grain markets. One Midwest trader warned producers not to overlook current pricing opportunities.
“But it’s the corn and soybeans that we may look back in six months — if this war does come to an end, in six months from now — and see much lower prices than we’re trading at,” says Brian Hoops with Midwest Market Solutions. “So if you’re a producer out there, you have to ask yourself: ‘What am I going to do if I didn’t sell corn at $5 or soybeans at $12? How do I explain that to my wife, to my banker?’ You don’t want to do that. You want to make sure that at least you’re buying some insurance that you guarantee these prices will be there six months from now.”
RealAg Radio host Shaun Haney told RFD News on Wednesday that many farmers are struggling to make long-term decisions while conditions continue changing daily.
“We need to make the decisions now, right? So the outcome is later, but the decision is really now, as we have people who are really in the middle of planting,” Haney said. “And so some of those switches from crop type to crop type are based on what’s in the news cycle today. I guess you can do that, but I don’t know if that’s super advisable. I think you kind of need to really know your costs and map things out, and go with what the numbers and a combination of what your gut is telling you.”
Haney says he does not expect input prices to return to pre-war levels anytime soon.
New data on farmer sentiment also reflects growing concern about the ag economy. CME Group Director of Ag Markets Fred Seamon told RFD NEWS many corn farmers now expect significantly higher break-even costs this year.
“Over 65% of respondents expect their farm’s net income to be either negatively or very negatively impacted due to the uncertainty,” Seamon said. “Also, of the respondents that replanted corn last year, a little over 14% think corn break-even prices will increase from 6% to 9% this year, and over 36% expect break-even prices to increase 10% or more.”
Spring planting continues to move ahead of the five-year average, with USDA’s latest Crop Progress Report showing both corn and soybeans progressing at a strong pace nationwide.
Ohio farmer Chris Gibbs joined us on Market Day Report to provide an update on conditions from his operation.
In his conversation with RFD News, Gibbs discussed the background of his farming operation and shared how the weather has impacted planting conditions so far this season. He also outlined current planting progress and compared this year’s pace to previous seasons.
The discussion also focused on concerns about fertilizer and diesel prices, as well as conversations across parts of the Midwest about dry conditions and cooler temperatures affecting early crop development.
Gibbs also shared his outlook for the growing season and reflected on whether there have been any significant trade-related developments affecting his operation since his last time on the program, as well as the importance of trade agreements for U.S. agriculture.
