🇺🇸🚜🛢 Biggest Diesel Shock Since 2022 Deals Another Blow to US Farmers

While US farmers brace for higher fertilizer and chemical bills tied to turmoil in the Middle East, another expense is already taking a bite out of razor-thin margins: diesel fuel.

Prices for the fuel that powers tractors, combines and grain trucks have surged as the war in Iran disrupted global oil flows, catching many producers who expected lower energy costs this year off guard. In Illinois, the top US soybean-producing state, farm diesel averaged a record $5.41 a gallon at the start of May, nearly double the price a year earlier.

Current costs, which have moderated some in recent weeks amid prospects for a US-Iran peace deal, still rival levels last seen in 2022 after Russia’s invasion of Ukraine, adding a fresh burden for farmers already facing weak crop prices and mounting financial pressure.

Marty Richardson, who grows corn and soybeans and raises cattle in Missouri, experienced the sticker shock when he recently ordered diesel after running through supplies he bought in January for spring planting.

“I usually get 8,000 gallons, and I got 4,000 for what I paid for the 8,000 gallons in January,” Richardson said. The fuel cost him about $4.74 a gallon. “That is the killer out here right now.”

The spike in diesel, combined with higher prices for fertilizer and crop-protection chemicals produced at facilities in the Middle East, is expected to further eat away at profit margins that were already running negative for the average corn farmer. Data from the US Department of Agriculture show that fuel, fertilizer and pesticides together typically account for about 15% of total production expenses for farmers annually.

Even if the US and Iran finalize a peace deal, it will take time for the war-related premiums on those input prices to dissipate, said Wesley Davis, chief agriculture economist at Meridian Ag Advisors.

🔗 https://finance.yahoo.com/sectors/energy/articles/biggest-diesel-shock-since-2022-110000336.html