In an Article by Alberto Amador, West Area Ag Economics Specialist, he writes: it seems that the first quarter of 2026 is bringing several challenges for farmers and ranchers. Geopolitical conflicts in the Middle East have impacted both agricultural commodities and energy markets, affecting Oklahoma’s food production and farm profitability. Weather, like every year, is another relevant factor that should be closely monitored. Recently, some forecasts suggest a high possibility of a fast transition from La Niña to El Niño. Let’s analyze how these factors may impact farms in Oklahoma.
To begin with, let’s analyze the implications of the Middle East conflict. The attacks have posed a high risk to shipping and transportation, especially through the Strait of Hormuz, where energy and fertilizer products are transported to their destinations. Approximately 20% of the world’s oil and natural gas transit across the Strait and the Gulf. As a result, fuel prices increase, but this also affects other industries, such as fertilizers. Natural gas is a crucial input in nitrogen fertilizers, so production costs have increased. Additionally, beyond the Strait of Hormuz, Middle Eastern countries play a key role in global fertilizer production. Interruptions in trade flows and constrained input availability could result in the shutdown of refineries and fertilizer plants in the region. According to RaboBank, the region accounts for 44% of global urea exports, 27% of global ammonia exports, 25% of global phosphate fertilizer exports, 36% of global phosphate rock exports, 47% of global sulfur exports, and 9% of global potash exports.
After the conflict began in the first week of March, a DTN retail fertilizer price tracker showed discrepancies in seven of the eight principal fertilizers. The largest increases were in urea and anhydrous ammonia, by 2.3% and 3.5%, respectively, while DAP decreased by 0.4%, and 10-34-0 fell by 0.3%. The nitrogen fertilizers rose due to constraints in global supply. The U.S. doesn’t rely on nitrogen imports as much as it does on potassium. For this reason, we should expect an increase in potassium fertilizer prices, especially for spring production.
The weather is a crucial factor that is analyzed each year. During the first months of 2026, La Niña effects have been present, and some forecasts have suggested a possible fast transition to El Niño this year. If that occurs, the chance of a dry spring is high (currently, some areas are in drought). While dryness allows field preparation for spring crops, it can impact wheat yield, and summer precipitation could be volatile, with periods of good rain but short dry intervals. As a consequence, estimated production may decrease, and prices may rise.
Regarding wheat, both geopolitical conflict and a faster transition into El Niño are driving price shifts. The situation in the Middle East has already affected wheat prices. After the conflicts began, future prices for the July contract are above $600/cwt, although how long these high prices last will depend on how long the war continues. So far, global and domestic demand remain constant. Therefore, weather risks, including spring drought, threaten the expected wheat production. High prices may look positive for producers, but it’s important to remember that these are only speculations, and the duration of high prices is uncertain. Even though wheat is not facing high fertilizer prices or high fuel costs for harvesting, the quality of the crop during grain filling in spring remains a risk to consider.
In contrast, spring crops, hay, and pasture are more vulnerable to the rising production costs. Fertilizers, fuel, and repair and maintenance costs are all trending upward. This year seems to be under a multifaceted, complex umbrella, with expensive fertilizers, the risk of spring drought, and no consistent precipitation in summer. Good timing for planting and fertilizer applications could be key to good results. I suggest analyzing and calculating costs for different tillage methods and comparing the overall cost-benefit. Finally, for ranchers, adjusting stocking rates based on summer conditions and considering the economic costs of hay, especially for nutrition, are important management actions.
In scenarios like this, decision-making becomes more complex, as conditions are rarely optimal and timing for inputs or key operations may not align with original plans. While current forecasts suggest potential risks, outcomes remain uncertain, and conditions may change. This year may require a flexible approach, where producers adjust decisions based on evolving weather patterns and market signals. Prioritizing key areas such as input use, planting timing, and forage management can help improve results. Developing a business plan and using available resources can also help reduce risk exposure.
