Traders and government officials voiced a common lament for much of March: How good are forecasts when the surveys they depend on were taken before the start of the Iran war?
But the data delay for farmers is ending. USDA’s big Prospective Plantings, due out March 31, was mostly collected after the bombs began falling in the Middle East, so it should offer the best guide yet about how the conflict affects growers and the corn and soybean crops they’re planning for spring.
Acreage matters, of course, because it’s half the equation for production. Yields won’t be known for months, and even the acreage report has a short half-life, with USDA in June reporting its best guess about how much actually went in the ground.
Price swings after the acreage numbers sometimes are huge, especially if the market is caught off-guard by shifts from one crop to another. With so many factors in play, this year’s edition is particularly vulnerable to big moves.
The most intriguing question for 2026 is whether a sharp spike in fertilizer and fuel costs will upset the apple cart. While the U.S. isn’t dependent on supplies through the Strait of Hormuz, many parts of the world are, just as planting begins in the northern hemisphere.
USDA’s most recent take, offered at its annual outlook conference last month, used the conventional wisdom at the time: Farmers should shift ground back to soybeans after boosting corn a year ago, planting 94 million acres to the feed grain and 85 million to the oilseed.
The war, in theory, should reinforce and perhaps even exacerbate that trend, because corn is a nitrogen-hungry crop. Urea is up 30% at the Gulf and gains are even higher out of the Middle East. Still, as ominous as that sounds, the average fertilizer cost per corn acre in Illinois is up only 9% over the past month, though fuel will add to the bill: Farmgate diesel is some 35% higher too, and financing expenses are also on the rise.
On paper, both crops are deep in the red with triple-digit losses projected when all costs are included, including payments for family living expenses and replacement of capital items like equipment and buildings. Corn would make $20 less per acre than soybeans, a dramatic reversal from a year ago, when soybeans looked like a loser.
Based on production cost adjustments, it appears corn intentions could be even lower than USDA’s recent forecast, with soybeans gaining more ground, though the ratio of corn to soybean plantings in the report could be close to the 10-year average if producers find other alternatives or even let some fields fallow.
As important as the end-of-March estimates are, don’t expect the market to trade the numbers for long. Other factors to watch:
Planting speed
Traders like to see 85% of the corn crop in by the middle of May. Textbooks say yield potential begins to decline after May 15, and the data agrees, at least to a point.
Over the past 15 years, corn yields tended to increase or decrease depending on the percentage of the crop in by May 15. But prior to that, from 1990 to 2009, this metric for timely planting actually decreased on average. That suggests growers tended to keep planting as long as they could if conditions were fast. Perhaps one of the lessons from the Great Financial Crisis of 2008-09 was to rein in risk by not going overboard on acreage.
Growers worldwide appeared to get that message loud and clear: World crop acreage decreased in the last 15 years even when corn prices were higher; plantings rose in the 1970s and 1980s when grains were stronger.
Shipping costs
Barges are flowing north along the Mississippi, with no major problems reported for late shipments to the Midwest. Delays in Davenport and Alton are running 90 minutes to 2 hours, but queues are short.
Shipping costs are on the rise, expenses farmers likely will absorb through weaker basis, but surcharges don’t appear out of the ordinary. Barge rates on the Mississippi are the highest for mid-March since the hyperinflation year of 2022 coming out of the pandemic, but costs actually declined last week as more empties made it north.
Rail costs to move grain west are also soft, down significantly from March levels in 2025, but surcharges could still tack 10 to 20 cents to the bill. That’s about the same as fuel surcharges on trucks.
The fuel factor
Energy prices that impact shipping costs cut both ways for growers. Farms burn plenty of fuel to plant, grow, harvest, dry and haul crops. But they’re more than consumers, producing feedstocks for biodiesel and ethanol. Higher crude oil prices have a varied impact on agriculture, depending on how they flow through the food dollar.
In the overall economy, higher energy costs raise inflation. In recent years, pain at the pump brought distress at the supermarket though those eating out suffered less. But during the first energy shocks in the 1970s and 1980s, the cost of eating at home went down when lines formed at the gas station. That mirrored the pattern in prices for eggs and chicken, which 50 years ago was dubbed the “winged warrior against inflation.”
Farmers in the 1970s and 1980s adjusted acreage, with higher fuel costs spurring increased plantings. That was the opposite of the trend in the last 15 years, when higher energy costs led to lower plantings around the world.
Inflation and interest rates
The Federal Reserve made no change to its target for short-term interest rates, keeping the current band of 3.5% to 3.7% in place at the end of its meeting last week, with outgoing Chairman Jerome Powell sounding hawkish at his final scheduled press conference. The tone, plus aggressive safe-haven buying of Treasuries at times during the war sent the normal placid bond market on a volatility tear, with price swings more associated with commodities rather than white-shoe brokers.
Traders betting on Federal Funds Futures don’t expect any rate cuts during the rest of 2026, with two reductions possible in 2027. Participants at the Fed meeting were even more circumspect, viewing only one cut in 2027.
Farmers: Take note
Hotter than expected inflation readings, even before the spike in fuel prices, triggered some of this caution, and farmers should take note. Over the past 15 years, a stronger Consumer Price Index was associated with higher net farm income. Before then, hotter CPI’s and lower farm earnings went hand-in-hand, even though corn profits were better.