Rising energy costs challenge fertilizer planning and grain pricing decisions.
Only 19% of Southern farmers pre-booked fertilizer, compared to 67% in the Midwest according to a Farm Bureau survey. This means many Southern producers are now facing higher input costs than expected.
As farmers know, fertilizer is one of the most important inputs in row crop production. Sudden price increases can quickly affect farm budgets, breakeven levels, and marketing decisions. Many fertilizers, especially nitrogen, rely on natural gas production. As a result, fertilizer prices are closely linked to global oil markets.
Recent tension in the Middle East and concerns around oil movement through the Strait of Hormuz have added uncertainty to energy markets. These disruptions have raised oil prices worldwide, which has also pushed fertilizer and diesel costs. This situation has caused concern among farmers as planting season approaches.
To understand how farmers are responding, the American Farm Bureau Federation conducted a survey from April 3 to April 11 across the United States. The survey focused on fertilizer and fuel purchasing decisions.
As noted above the survey results showed large regional differences with only 19% of Southern farmers pre-booking fertilizer, compared to 67% in the Midwest, putting southern producers at higher risk because they are now facing higher input costs than expected.
Rising input costs increase breakeven prices, requiring farmers to reconsider their marketing plans. Grain prices that appeared profitable earlier in the season may no longer fully cover expenses. Even grain that was priced earlier may now generate lower returns due to higher production costs.
Farm input price data collected by the USDA Agricultural Marketing Service shows that fertilizer and diesel prices remain higher than pre-2021 levels, even after easing from their 2022 peaks. Price ranges also vary widely, showing that careful timing and planning can help farmers find better deals.
Managing these risks requires flexible strategies. Producers may consider marketing smaller portions of grain at a time and closely monitoring costs. Storage planning is also important, especially for farmers with limited on-farm storage capacity.
Understanding production costs and maintaining adaptability remain essential to navigating ongoing volatility in farm input markets.