By Gary Schnitkey, Nick Paulson et.al
The current conflict in the Middle East has increased the prices of energy and fertilizers. Impacts on corn and soybean prices are more difficult to determine. Here, we examine price movements since the start of airstrikes from the United States (U.S.) and Israel on February 28. The overall impact on costs will depend on the length of the conflict. In particular, energy and fertilizer prices could increase more if the Strait of Hormuz remains closed for a lengthy period, or if long-term Iranian oil production is seriously degraded. While many inputs for 2026 have already been purchased, profitability prospects for this year are likely reduced. Cost increases could also be felt in future years.
Background
The U.S. and Israel began a bombing attack on Iran on February 28, 2026. Iran is in the Middle East, which is a major supply region for crude oil, natural gas, and fertilizers. Like in the past, conflicts in the Middle East threaten global energy supplies and increase economic uncertainty, thereby increasing global prices.
Although a major supplier of energy-related products, the Middle East is not a large producer of agricultural products and, in fact, imports many agricultural products (see Glauber). As a result, conflicts in this area do not significantly endanger global agricultural supplies, unlike the Ukraine-Russia conflict, in which large areas of Ukraine were affected. Global agricultural stocks may actually increase as conflict in the region could reduce the amount of agricultural products moving into the Middle East. Therefore, a large, immediate increase in agricultural commodity prices is less likely than during the Ukraine-Russia conflict.
Note that the 2026 U.S. planting season is very near, and most farmers have already made most production decisions. Major shifts in acreages are unlikely, as the majority of inputs have been priced and ordered. Fuel for spring operations is in place on many farms. Most phosphorus and potash fertilizers have been applied. Spring and post-plant nitrogen will still need to be applied, but those inputs may already be priced on most situations. On many farms, the costs of seed, fertilizers, and chemicals have largely been determined. Still, some farmers still need to purchase inputs. Moreover, fuel and other inputs for the summer and fall still need to be purchased in most forms.
In the following sections, we compare price movements before and after the conflict began at the end of February. As is always the case, other supply and demand factors have influenced prices in recent weeks. Hence, price changes may not be entirely due to the Iran conflict. Still, price movements indicate the direction of impacts. We will show changes for 1) corn and soybean prices, 2) crude oil prices, and 3) fertilizer prices.
Source : illinois.edu