NASHVILLE, TENN. (RFD NEWS) — An end to the war in Iran could be in sight, a development that has been driving up fertilizer and diesel prices for farmers. In an interview with Fox News on Wednesday morning, President Donald Trump said the war is very close to being over. His comments come as the two-week ceasefire continues.
Vice President JD Vance held peace talks with Iran in recent days. No progress was made, and Vance says the ball is now in their court. In the interview with Fox, Trump doubled down on his decision to strike Iran, saying it was necessary to keep nuclear weapons out of their hands.
The U.S. military is still in the Strait of Hormuz, enforcing a blockade. It comes as diesel nears the record high we saw back in June 2022, when it hit $5.81 a gallon. Traders tell us they have had many conversations with clients who are feeling the pressure.
“One-hundred percent — especially if you didn’t have a lot of those needs hooked up,” said Sam Hudson. “If you’re running diesel for irrigation or something here, it’s definitely a concern. And also from a basis standpoint, when you think about freight in general, not only for grain but for everything that’s an inflationary aspect in your, you know, we’re seeing surcharges already across a lot of the rail markets. And I think that’ll also eventually translate to our barge freight markets as you get into mid and late summer here, if it persists.”
There are several ships lining up right now, waiting for their turn to pass the Strait of Hormuz. Even if that were to happen today, Hudson says the impact of its closure will be felt for months.
“We’ve seen a bit of an easing, or maybe a few less fireworks, in that energy market here to start the week with the prospect of some peace talks,” Hudson continued. “But even if you open that up, we have the same lingering issue with refinery capacity around the globe, and I think that’s going to underpin fuel values all the way through the end of the year. And I think how that translates to the board of trade is the fact that you’ve got a lot of end users that have had decent pile fuel margins. Those aren’t not going away, and I think that’s going to keep them bidding for these inventories as you get into the end of the year to take advantage of that because they may not have been able to take full advantage of what we’ve seen here since the onset of the war. So I think that underpins values, and you mentioned those cotton prices, you’ve got to think about how this affects things downstream. If you see a 20% rise or something in cotton values, you could start to seal some acres back as you get into the 2027 crop cycle.”
Ongoing uncertainty surrounding fertilizer shipments and rising energy markets is creating new challenges for agriculture, as disruptions tied to global tensions continue to ripple through the sector.
RealAg Radio host Shaun Haney joined us on Wednesday’s Market Day Report to break down what it means for farmers right now.
In his interview with RFD NEWS, Haney discussed how uncertainty in key shipping routes and volatility in energy markets are adding pressure to agriculture, particularly as producers head deeper into the planting season. He explained that rising crude oil prices and reacting fertilizer markets could quickly translate into higher input costs for farmers.
Haney also outlined how rapidly those energy shocks can move through the system, impacting fuel, fertilizer, and overall production expenses in a relatively short timeframe. Looking ahead, he emphasized the importance of closely monitoring market signals as farmers make critical planting and purchasing decisions amid ongoing volatility.
Rising Fuel Costs Push Grain Transportation Prices Higher
Higher fuel prices are beginning to push grain transportation costs upward across rail, barge, and ocean shipping, adding another layer of expense for U.S. producers moving crops to market.
Diesel prices jumped sharply to $5.64 per gallon — up 24 cents on the week and more than $2.00 above last year — increasing operating costs across all freight modes. That pressure is already showing up in rail markets, where secondary shuttle bids climbed to $567 above tariff, significantly higher than both last week and a year ago.
Rail demand remains strong, with grain carloads up 4% week-to-week and well above historical averages. At the same time, barge movements declined 23% from the previous week, tightening available capacity even as year-over-year volumes remain higher.
Ocean freight rates are also moving higher, with Gulf-to-Japan shipping costs up 4% on the week. Vessel demand remains steady, signaling continued export flow despite rising costs.
For agriculture, the combination of higher fuel prices and firm transportation demand is increasing the cost of moving grain, which can narrow basis opportunities and reduce net returns at the farm level.
Biofuel Groups and Ag Lawmakers Plead for Year-Round E15
With fuel prices approaching new records, the National Corn Growers Association (NGCA) is once again pointing to E15 as an easy fix to lower consumer costs. They say it not only gives farmers a reliable market but also gives retailers some certainty.
“To give retailers certainty to make very costly investments in their facilities and to make these decisions to adopt this fuel,” NCGA Biofuels Director Lane Howard told RFD NEWS on Tuesday. “They need, we’re not looking for market certainty, we’re looking for regulatory certainty so that these retailers, these purveyors of our fuel to the customer can feel comfortable making these large investments and portfolio adjustments.”
Lawmakers are also calling on their colleagues to pass a year-round E15 sales mandate. Senator Chuck Grassley (R-IA) and Senate Ag Committee Ranking Member say they could add more cash for assistance to the upcoming defense spending bill, and could help offset high energy costs for farmers. But after speaking with farmers, Grassley does not agree that this is the right call. Instead, he wants to see E15 added to that spending package.
“Put E15 in that instead of more money for farmers because farmers want their money from the marketplace and not from the U.S. Treasury,” Grassley said. “And the economists for the Iowa Corn Growers say that’s going to bring $14 billion more into the farmers’ pockets from the increased price of corn if we make E15 year-round.”
The House has a council tasked with finding a path forward for year-round E15 sales, but it has yet to meet the deadlines to present its findings. Ethanol groups, like the Renewable Fuels Association, have called on lawmakers to pass legislation, saying farmers and American families can’t wait any longer.
