Rising costs offset the rally in agricultural commodities — CoBank

Rising commodity prices are unlikely to offset higher input and production costs, while rural areas of the United States are expected to face the greatest pressure from increasing fuel and energy expenses, according to a CoBank forecast in its quarterly Knowledge Exchange report released on April 8.

The report highlights that fuel represents a larger and less flexible share of spending in rural economies. Longer travel distances, limited public transportation, and reliance on diesel-intensive sectors such as farming, freight, and construction mean that price spikes quickly translate into higher costs for households and businesses.

According to CoBank’s lead energy economist Teri Viswanath, higher diesel prices are also increasing the cost of transporting food and goods into rural areas, pushing up local prices and amplifying inflation. She added that the effects of a potential closure of the Strait of Hormuz and intensified attacks on energy infrastructure in the Persian Gulf could be long-lasting and are likely not yet fully priced into US markets.

Grain and oilseed prices rose at the end of the last quarter, with soybeans gaining 12% on the back of a soybean oil rally, corn increasing by 4%, and wheat surging nearly 22%, providing some support to farm revenues.

However, these gains are insufficient to offset rising fuel and fertilizer costs, which have increased by 20% to 40% since the start of the Iran conflict. In particular, disruptions in urea supply chains could push fertilizer prices back to 2022 levels without comparable support from crop prices.

Rising input costs are also adding pressure, as higher diesel prices could increase fuel expenses by around $2,000 per farmer, while grain elevators may face additional costs amounting to hundreds of thousands of dollars.

These cost pressures are already influencing planting decisions. Soybean acreage is expected to expand in 2026 due to its relatively lower production costs, while corn acreage is projected to decline by 3.8% to 95.3 million acres. Wheat plantings could fall to their lowest level since records began in 1919. Meanwhile, new renewable fuel requirements are set to support the biodiesel sector, although their impact on domestic feedstock demand, particularly soybean oil, will remain limited.

Tags: prices, agricultural products, USA