Crop Inputs

Crop input updates

Continued U.S.-Iran tensions, including another flare in hostilities in early July, have increased upside risk for oil and fertilizer prices. Markets are not yet signaling a return to the severe supply disruptions seen earlier in 2026.

Crude oil prices fall.

Crude oil prices declined in June before markets added back some risk premium in July. Oil prices remain below their spring peak, supported by market expectations for periodic escalations and de-escalations (not prolonged shutdown of Gulf exports), weakening global oil demand expectations, and slowing economic growth in several regions. Natural gas prices strengthened modestly during June as above-normal temperatures across much of the U.S. increased electricity demand. Global Liquified Natural Gas markets remained tight as Middle East export flows recovered slowly, and international buyers continued to rely heavily on U.S.

Fertilizer prices begin to ease.

Fertilizer prices eased slightly toward the end of June as the temporary peace agreement between the U.S. and Iran eased supply constraints. It remains unclear whether prices will continue to soften given the recent flare up in hostilities. Nitrogen markets have been the most impacted by the conflict and more recently have been pressured by rising natural gas costs. Phosphate prices also remained firm due to the conflict, reduced operating rates at plants, sulfur shortages and ongoing export restrictions from major suppliers. President Trump temporarily suspended countervailing duties on certain phosphate imports, though the full impact to prices and supply remains unclear.

Transportation costs increase.

Bulk shipping rates were mixed in June as softening in the Capesize category dampened gains across other vessel sizes. (Capesize is one of the largest categories of dry bulk ships primarily used for iron ore and coal trades. Their freight rates matter because they influence the broader dry-bulk shipping market.) Grain shipments drove demand in the U.S. Gulf and South Atlantic regions. Container rates spiked in June, underscoring how strong demand and rising shipper urgency are outpacing continued fleet expansion. The surge occurred earlier than typical peak shipping periods, as some shippers acted ahead of expiring tariff exemptions, the introduction of new tariffs, and added costs linked to higher fuel demand during peak season. This earlier-than-usual peak suggests the typical July rate spike may be more muted or could even give way to softening rates. Trucking rates rose in June due to seasonal agricultural demand, elevated fuel costs and tightening carrier capacity.

Labor H2-A guestworkers program grows.

Beginning in June 2026, the Adverse Effect Wage Rate (AEWR) will shift to a two-tiered system, with Tier 1 (covering most workers) for low-skill roles and Tier 2 for positions requiring at least three months of experience. The new structure also allows lower wages for workers receiving free housing, with a floor tied to state minimum wage. In California, for example, wages are expected to drop from $19.89 per hour to $16.45 for Tier 1 and $18.71 for Tier 2. H-2A demand remains robust, with certifications rising across all AgWest states in the first half of 2026 compared to a year earlier. Lower labor costs will have the greatest impact in California and Washington, where labor-intensive fruit and vegetable production drives heavy reliance on H‑2A workers.