Conflict in the Middle East, though tensions have eased, could still impact U.S. farmers and ranchers through disruptions to energy and fertilizer markets. The region is a major supplier of both oil and fertilizer. Thus, conflict in the region creates volatility in these markets. Daniel Munch, an economist with American Farm Bureau, wrote that during the conflict between Israel and Iran, benchmark Brent crude oil prices surged 15-20%, before falling back when the ceasefire was announced. Josh Linville, StoneX Vice President of Fertilizer, said the clash caused price spikes for urea of 20-40% in a matter of days. Again, prices have since come down with the ceasefire.
Any disruptions to energy markets can translate into higher costs for farmers and ranchers for diesel, gasoline, and other energy sources used for machinery and equipment, for transporting crops and livestock, and for drying crops. U.S. producers are also exposed through global fertilizer markets. According to Munch, 25% of U.S. total fertilizer consumption last year was imported including 97% of the potash used, 18% of nitrogen, and 13% of phosphate. Several countries in the Middle East Saudia Arabia, Israel, Egypt, Jordan, and Qater supply the U.S. with fertilizers. Conflicts in the region can affect both availability and cost.
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