U.S. Plains farmers face drought and Iran war cost surge

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US Plains farmers face drought

Highlights

Farm diesel costs surged 72%, urea prices rose 55%, and another nitrogen fertilizer increased 33% after the Strait of Hormuz closure in late February.
The USDA expects the smallest hard red winter wheat crop since 1957, with over 60% of the continental US in drought as of latest reports.
Fertilizer prices in Texas climbed to $558 per ton in April from $402 in February, with drought slashing wheat yields from 80 to 18-20 bushels per acre.

Drought and input inflation strain spring planting

As reported by Reuters, the financial pressure has intensified since the closure of the Strait of Hormuz in late February pushed up farm diesel and fertilizer prices while dry conditions continue to damage wheat and other crops. Prepared testimony cited by the Kentucky Farm Bureau to a U.S. Senate agriculture committee hearing this month says farm diesel costs have risen 72%, urea prices are up 55%, and another nitrogen-based fertilizer has increased 33%.

Farmers say the cost surge arrives on top of existing stress from high input expenses, drought and weaker crop prices linked to the fallout from President Donald Trump's trade policies. In West Texas, Scott Irlbeck says he may skip fertilizer entirely for sorghum he plants this month because the drought has already reduced the likelihood of profitable yields.

The U.S. Department of Agriculture expects the smallest hard red winter wheat crop since 1957, and the latest U.S. Drought Monitor report shows more than 60% of the continental United States is experiencing drought, up from 43% at the start of 2026 and 33% a year earlier. Agronomists in Oklahoma and South Dakota say poor growing conditions are also prompting farmers to reconsider fertilizer applications already planned for wheat planted last fall.

Regional fallout deepens farm economy stress

In Oklahoma, farmer Tommy Salisbury says higher input prices have erased the benefit of the Trump administration's $12 billion farm aid package that was intended to offset tariff damage. He says producers are paying 2026-level input costs while receiving crop and grain prices more typical of the 1970s and 1980s.

USDA Secretary Brooke Rollins says the farm economy is struggling as prices rise, and the department says the administration is focused on boosting domestic production of affordable fertilizer. Rollins said last month on X that about 80% of U.S. farmers locked in supplies last fall before the war began, but an American Farm Bureau Federation survey found most farmers still cannot afford all the fertilizer they need for this growing season.

Conditions vary by region. The Farm Bureau says advance fertilizer purchases are more common in the Midwest, where crop rotations support earlier buying decisions, while farmers in the South often lack storage facilities and are less likely to prebook supplies.

That leaves many Southern Plains producers exposed. West Texas farmer Kody Carson says drought has cut his winter wheat yield estimate to 18 to 20 bushels per acre from an expected 80, making it hard to justify expensive fertilizer for his cotton acreage. Tom Gregory, another Texas farmer, says fertilizer costs rose to $558 per ton in April from $402 per ton in February, forcing him to limit applications while continuing spring planting to preserve his family's livelihood.

Our earlier coverage of the UK’s sanctions adjustment on Russian-refined diesel and jet fuel explained how London created a narrow carve-out to ease fuel shortages after the Strait of Hormuz disruption. We noted the licence allows imports from third countries under compliance and record-keeping requirements, is open-ended but subject to review, and was introduced as governments sought to stabilise energy markets amid the wider conflict-driven supply shock.

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