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By Debbie Carlson
As grain farmers put together for spring planting, any optimism for the approaching season is being tempered by the financial actuality that they might face one other money-losing 12 months. This was trying to be the case even earlier than the battle started in Iran, which triggered a surge in fertilizer costs.
Enter prices skyrocketed in 2022 after the beginning of the Russia-Ukraine conflict and stay elevated, whereas commodity costs sit below manufacturing prices. The American Farm Bureau says many row-crop farmers are taking a look at 4 or 5 straight years of operational losses, even after accounting for crop insurance coverage funds and ad-hoc help.
Philip Nelson, a fourth-generation farmer in LaSalle County, Illinois, who was not too long ago elected as Illinois Farm Bureau president, says the earnings farmers made when crop costs had been excessive a couple of years in the past have eroded and steadiness sheets are tight.
“If you happen to regulate for inflation, we have got the identical commodity costs we had in 1974, and on the similar time, the enter prices have quadrupled,” Nelson says.
Enter prices aren’t the one difficulty clouding farmers’ outlooks for spring planting. Final 12 months, the U.S. harvested a document corn crop of roughly 18 billion bushels, and that heavy provide continues to weigh in the marketplace, says Sean Lusk, vice chairman, industrial hedging division for Walsh Buying and selling. As well as, the outlook for soybeans stays combined as farmers wait on the Trump administration to resolve on a possible enlargement of the biomass-based diesel program that might offset a number of the misplaced export market share to China amid current commerce tensions.
In a difficult 12 months, danger administration instruments and fine-tuning advertising plans tackle added significance.
Shifting Farmer Sentiment
The Purdue College-CME Group Ag Economic system Barometer weakened in December, reflecting farmers’ declining long-term outlook about U.S. soybean export prospects as competitors from Brazil will increase. Extra not too long ago, the main target has shifted to tensions between present circumstances and future expectations, with farmers extra optimistic concerning the former than the latter.
The U.S. Division of Agriculture’s (USDA) Financial Analysis Service forecasts web farm revenue to fall by 2.6% year-over-year in inflation-adjusted phrases. The decline is mitigated partly by the Farmer Bridge Help Program and the Emergency Commodity Help Program, USDA’s help packages for farmers to offset losses due to the commerce atmosphere. Nonetheless, the American Farm Bureau says most producers probably will nonetheless lose cash.
College of Illinois agricultural researchers forecast crop costs to be marginally greater in 2026. As of early March, CME Group September 2026 Corn and Soybean futures are buying and selling round $4.55 and $11.32 per bushel, respectively.
Worth features in comparison with final 12 months will probably be offset by small will increase in total prices with yields at pattern ranges. Break-even costs to cowl all prices with out authorities assist are within the $4.70-$4.90 vary for corn and $10.80-$11.25 vary for soybeans, near or above present market costs and pricing alternatives for the 2026 crop.
David Iserman, a fifth-generation farmer based mostly in Streator, Illinois, is sanguine concerning the rising season, based mostly on these figures. “We’re undoubtedly both breaking even, if we’re fortunate, or dropping cash,” he says.
Value-Chopping Measures
Annual inputs, akin to seed, fertilizer and chemical compounds, are greater than final 12 months. Corn consumes extra inputs than soybeans, and that will issue into what U.S. farmers plant this spring – although markets gained’t know for certain till the 2026 Potential Plantings report is launched on March 31. Nonetheless, many farmers sometimes nonetheless stick to a conventional 50/50 corn and soybean rotation for agronomic causes, which is what Iserman and Nelson plan to do.
Each producers have skilled lean occasions earlier than and are taking a look at methods to chop prices. Iserman says fertilizer is his primary value. He practices no-till farming on his soybeans and strip-till for corn. In strip-till farming, producers until a slim strip of soil for fertilizer on the corn, which minimizes loss.
Iserman could tweak how a lot he makes use of and is learning the fee, utilizing software program to gauge his returns on his fertilizer use.
“We’re taking a look at all of our fertilizer inputs from the standpoint of not yield, however revenue. For each greenback I put in, I wish to get $1 again. I do not care about successful a yield contest. I care about return,” he says.
Nelson additionally says he would possibly in the reduction of barely on fertilizer use as a result of he has constructed it up within the soil, giving him an possibility to chop prices.
Fertilizer Costs Keep Excessive
Fertilizer stays probably the most unstable and important non-land value, typically accounting for 20% to 30% of whole manufacturing bills, in line with USDA knowledge.
Josh Linville, vice chairman of fertilizer at StoneX, says costs stay considerably greater than a 12 months in the past. In early 2026, a barge of urea on the port of New Orleans traded round $450 per ton, in comparison with $389 per ton in early 2025. Nitrogen costs are additionally greater versus a 12 months in the past.
Three international components drive this inflation, Linville says. China, a significant international provider, has indicated it could not export urea till August 2026, eradicating hundreds of thousands of tons from the worldwide market. In Europe, persistent excessive pure gasoline prices have restricted nitrogen manufacturing to about 75% of regular for the reason that second half of 2022 due to the Russia-Ukraine conflict. Within the Center East, the Strait of Hormuz is a important choke level by means of which three of the highest 10 urea exporters should ship their product. As of early March, the Strait of Hormuz is going through a blockade.
To raised perceive fertilizer prices, some farmers take a look at the corn-urea and soybean-urea ratio. These ratios place fertilizer prices inside the context of crop prices, calculating what number of bushels of grain are required to buy one ton of vitamins.
A decrease ratio alerts a extra favorable time to lock in prices. At present, with low corn costs and excessive urea costs, the corn-urea ratio sits close to 87 to 90 bushels per ton, a five-year excessive. To handle this, some farmers are utilizing CME Group’s 10-Ton Urea U.S. Gulf futures contract. Launched final 12 months, this instrument permits particular person producers to hedge their fertilizer danger in increments extra suited to their precise area wants, and choices will help restrict value danger to the upside. Whereas fertilizer prices had been elevated in January, these ranges now seem comparatively engaging by comparability.
A Altering Method
“Frankly talking, we do not promote all of our grain in a single determination. We must be taking a look at doing the identical factor with fertilizer,” Linville says.
He notes that historically farmers have checked out their fertilizer purchases yearly, however watching costs all year long could assist them make smarter operational choices.
Farmers focused on including the fertilizer ratios as a part of their danger administration toolkit can begin by speaking to their native grain elevator, which can give them knowledge stretching again a couple of years to assist them plot developments, he says. With this info, farmers might be able to act on value modifications and lock in higher costs.