This is an updated version of an article that first appeared in the April 18 edition of the Pro Farmer weekly newsletter.
The message from financial markets is clear: Investors think the war is all but over. That would be objectively good news if correct. Unfortunately, the farm economy
won’t experience the same rapid “V-shaped” recovery seen on Wall Street. Instead, the spectacularly poor timing of the war is set to leave a long tail of disruption.
The S&P 500 hit a record high last week, extending an aggressive recovery from its March 30 low. Stock market anxiety, as measured by the VIX, retreated to prewar levels, and the volatility that recently rocked U.S. Treasuries also faded. Investors returned to government bond auctions in the U.K. and Japan — regions where energy shock fears had previously sent yields soaring. In the currency market, hedge funds and strategists appeared eager to resume selling the greenback, picking up where they left off before a flight to safety drove a bout of dollar buying.
A renewed bout of market jitters took hold early this week as the end of the two-week ceasefire with Iran neared and a Friday announcement by Tehran declaring the Strait of Hormuz open failed to last the weekend. Stocks ticked down from recent highs, volatility edged back up and the dollar firmed. But market participants appeared set to resume a risk-on profile Wednesday morning after President Trump late Tuesday announced an indefinite extension of the cease-fire.
Oil futures also rose to begin the week and saw Brent flirt with the $100 threshold Tuesday ahead of Trump’s cease-fire announcement. Crude futures remained up slightly Wednesday morning but continue to trade well off the early March highs that saw U.S. benchmark WTI futures just shy of $120 a barrel.
“Equities are treating the ceasefire and the absence of a worst-case oil shock as enough to keep the rally alive, even though the geopolitical situation remains unresolved and valuations look stretched relative to the risks still in play,” economist David Rosenberg of Rosenberg Research said in a Wednesday morning note.
Weather takes the wheel
Grain futures took a cue from rising energy prices at the outset of the war to power to new highs. Corn and soybeans gave up their war premiums in early April before pushing back to the upside in recent trade but remain below their March highs. Soybean oil is an exception, extending a push to new highs alongside higher crude oil and diesel prices. Wheat futures have also extended gains, getting additional support from dismal crop conditions and continued dry weather in key Plains growing areas.
Tightening the energy and input squeeze
While the financial markets remain eager to look past the conflict, don’t expect crude oil to return to prewar levels quickly. Infrastructure damage, shut-ins and the massive displacement of global shipping routes mean energy flows will take months, if not years, to normalize.
For farmers, high energy prices are a double-edged sword. While they can provide a floor for biofuel demand, the immediate impact is a surge in input costs. According
to a Farm Bureau survey released last week, farm diesel prices have surged 46% since late February, just as fieldwork, fertilizer transport and irrigation needs peak for
the planting season.
Fertilizer shock waves
The fertilizer market remains the true pain point. The closure of the Strait of Hormuz has choked off around a third of the usual transport of urea and other nutrients.
Ag economists at North Dakota State University last week said that even under their most optimistic scenario — a “quick reopening” of the Strait — this fall’s prepay urea is projected to average $636 a ton, 35% above precrisis levels. Read: Fertilizer prices have further to rise, even in a best-case scenario
Damage to infrastructure in the Gulf, along with higher freight rates and other factors, make it unlikely prices will return to prewar levels before 2028. The price spike likely has implications for 2026 yields. A recent survey for the National Corn Growers Association revealed only 60% of U.S. farmers had nitrogen fully secured for the 2026 season, and 64% said the
same for phosphate.
Globally, a round of fertilizer demand destruction is in store. The NDSU economists expect Brazil and the European Union to bear the brunt of the adjustment. Brazil is particularly vulnerable because its peak urea import window (July to November) coincides exactly with when prices are projected to hit their peaks.
What to watch now
The fertilizer crisis is casting its shadow, but the market’s immediate focus is shifting back to seasonal concerns. For the next several weeks, price action will likely be dictated
mostly by North American planting progress, early-season weather patterns, and the South American harvest. Traders are weighing these factors against relatively ample global grain supplies and the fluctuating value of the U.S. dollar.
Over the long term, a new structural factor may emerge in the form of commodity hoarding. As a long-term response to the war, several major importing nations have
signaled a shift toward strategic stockpiling to insulate themselves from future geopolitical shocks. A shift from “just-in-time” to “just-in-case” procurement could provide
an underlying floor for prices, but would also add a layer of unpredictability to global trade flows.
Ultimately, the surge in fertilizer prices — timed perfectly to disrupt the 2026 planting season — highlights a historical blind spot. As economic historian Adam Tooze recently noted, ancient civilizations were careful to schedule conflicts around the rhythms of the growing season.
“The current war,” he wrote, “is disastrous from the point of view of the modern agricultural cycle.”