Soybean and corn futures experienced gains as escalating tensions between the United States and Iran led to increased crude oil prices. The heightened hostilities in the Middle East, particularly affecting the Strait of Hormuz, have disrupted oil and fertilizer supply lines, causing a spike in energy costs for agriculture. This has driven up prices for energy-intensive agricultural inputs like diesel and nitrogen fertilizer, influencing the futures market for these key commodities. Market reactions suggest that participants anticipate continued volatility in crude oil, impacting agricultural and energy markets.
Energy price volatility, which began in late February 2026, directly fed into agriculture commodity prices through multiple channels, including ethanol margins linked to crude oil pricing and increased freight costs on ocean routes rerouted away from the Persian Gulf. A ceasefire agreed upon in April and formalized in June allowed shipping traffic through the Strait to begin recovering, initially easing prices back toward pre-conflict levels. However, the renewed conflict has unraveled this agreement, leading to Iran again closing the Strait of Hormuz, the world’s most important oil shipping route.
Crude oil prices have risen precipitously, with spot crude oil prices in Cushing, Oklahoma, increasing from $64.51 per barrel in February to over $90 per barrel. Brent, the international crude-oil benchmark, surged more than 10% recently, closing at $88 a barrel, while West Texas Intermediate settled at $82 a barrel. These increases are being transmitted to farmers, with diesel fuel prices reported at $3.90 per gallon, up by $0.76 from the previous level of $3.14 per bushel. Analysts from Enverus anticipate continued draws on crude and product stocks into the fourth quarter, potentially leading to "higher-for-longer" oil prices.
