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TUESDAY, SEPTEMBER 15, 2026   |   SPECIAL REPORT & ANALYSIS

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Hormuz Shock Swallows the Price Rally: No Major Row Crop Clears Breakeven for 2026/27

Farm Bureau economist John Newton finds September WASDE revenue gains for corn and soybeans are being eaten by a 45% diesel surge and record fertilizer bills, leaving every major row crop under water for a fourth straight year.

Analysis  ·  September 15, 2026

Higher crop prices were supposed to be the story of the fall. Instead, a new American Farm Bureau Federation (AFBF) Market Intel analysis (link) by John Newton, Ph.D., AFBF’s vice president of public policy and economic analysis, concludes that the input-cost shock unleashed by the early-March closure of the Strait of Hormuz has outrun the revenue improvement USDA penciled into its September World Agricultural Supply and Demand Estimates (WASDE) report, and that no major U.S. row crop is projected to cover total costs in the 2026/27 marketing year.

The record-high input cost environment means breakeven above total costs remains elusive for all major row crops for the 2026/27 marketing year, Newton writes, marking four consecutive years of returns below total costs.

The Farm Bureau findings in brief

Revenue is mixed, mostly better. September’s WASDE lifted per-acre revenue projections for corn, soybeans, rice, barley and oats versus USDA’s May outlook, but trimmed them for peanuts, cotton, wheat and sorghum, according to the AFBF analysis.

Post-Hormuz input costs are eating the gains. Fertilizer and diesel costs have surged nationally since the strait closed in early March. Newton puts the diesel increase at roughly 45% since spring and warns that, absent a resolution of the geopolitical risks (including recent disruptions in the Bab al-Mandeb Strait), input costs are likely to keep climbing into harvest.

Breakeven is out of reach across the board. Crops with falling revenue projections face deeper losses; crops with rising projections, such as corn and soybeans, may offset part of the added cost. Either way, AFBF projects every major row crop below total cost for 2026/27.

Revenue: better for corn and beans, worse for cotton and wheat

The September WASDE delivered USDA’s survey-based read on 2026 planted acres, yields and season-average prices. Using those figures, Newton estimates national average revenue per harvested acre for corn at $857, up $52 from the May projection of $805. Soybean revenue is put at $634 per harvested acre, up $30 from May’s $604. Rice posts the biggest dollar gain, rising $71 to $1,154 per acre, while barley (+$10 to $449) and oats (+$10 to $241) edge higher.

The losers are concentrated in the South and the Plains. Sorghum revenue falls $34 to $250 per acre, cotton drops $27 to $605, peanuts slip $6 to $931 and wheat eases $3 to $306, per the AFBF figures.

Figure 1. National average revenue per harvested acre, May versus September WASDE, 2026/27 marketing year. Source: USDA WASDE, USDA NASS, American Farm Bureau Federation analysis (John Newton).

Cost side: three record expense lines

Newton notes that season-average corn prices approaching $5 per bushel and soybeans near “beans in the teens” would ordinarily be welcome news in farm country. But since the Hormuz closure, cost pressure has intensified. Total production expenses are expected to reach nearly $500 billion in 2026, according to the analysis.

Fertilizer expenses for 2026 are projected at a record $40 billion, up 15% or $5 billion from 2025. Fuel expenses, including diesel, are projected at a record $22 billion, up 29% or $5 billion year over year. Interest expense is currently projected at a record $34 billion, and Newton expects persistent inflation to bring another rate increase at the upcoming Federal Open Market Committee meeting, pushing that line higher just as farmers open 2027 financing discussions with lenders.

Figure 2. Projected 2026 U.S. farm production expenses for fertilizer, interest and fuel, billions of dollars. Source: USDA ERS farm income data as cited by American Farm Bureau Federation.

What the Hormuz shock adds per acre

The math that hurts. Working from USDA’s most recent cost-of-production estimates and the roughly 45% run-up in diesel since spring, AFBF estimates that fuel and fertilizer price shocks have pushed production costs about $26 per acre higher for corn (Newton rounds this to “nearly $30” in the text), $14 per acre higher for soybeans, $30 per acre higher for cotton and $73 per acre higher for rice, compared with USDA’s pre-Hormuz input-cost projections. Peanuts absorb an extra $43 per acre. The AFBF chart shows diesel, not fertilizer, is the larger component for most crops: $52 of rice’s $73 increase and $19 of corn’s $26 is diesel.

For several crops, Newton observes, these added per-acre costs more than offset any projected revenue gain from higher prices.

Figure 3. Estimated change in per-acre production costs due to higher fuel and fertilizer prices versus USDA’s pre-Hormuz projections, by crop. Source: USDA ERS, USDA AMS, American Farm Bureau Federation analysis.

Revenue gains versus cost increases, by crop

Table 1. Farm Bureau estimates of 2026/27 revenue, post-Hormuz cost increases and returns over total costs, dollars per acre. Barley returns were not shown in the AFBF returns chart. Source: American Farm Bureau Federation analysis of USDA WASDE, NASS, ERS and AMS data.

Still under water, for a fourth year

For crops whose revenue outlook deteriorated since spring (cotton, peanuts, wheat and sorghum), higher input costs compound the damage and produce deeper 2026/27 losses than were forecast in May, Newton writes. For corn and soybeans, higher prices, despite potentially lower yields, may offset some of the Hormuz-driven cost increase.

But the bottom line is unchanged. AFBF’s estimated national average returns over total costs for 2026/27 are negative for every crop charted: about −⁠$50 per acre for soybeans, −⁠$79 for corn, −⁠$113 for wheat, −⁠$216 for sorghum, −⁠$258 for rice, −⁠$282 for oats, −⁠$293 for peanuts and −⁠$369 for cotton. The analysis characterizes this as the fourth consecutive year of returns below total costs.

Figure 4. Estimated national average returns over total costs, major row crops, 2023/24 through 2026/27, dollars per acre. Source: USDA NASS, ERS, WASDE; American Farm Bureau Federation analysis.

Analysis: why this report matters in Washington

The AFBF paper lands at a politically sensitive moment, and its framing is deliberate. By pairing USDA’s own WASDE revenue numbers with USDA cost-of-production data, Newton is building a documented case that the price rally has not restored farm profitability, a case that will be cited in the coming debate over supplemental economic assistance for 2026 crops and in any push to accelerate or enlarge farm program payments. Farm groups made the same argument successfully for 2024 and 2025 crops; a fourth straight year of negative returns strengthens their hand.

Several caveats deserve mention. These are national averages over total costs, which include opportunity costs for land and unpaid labor and management, so they overstate cash losses for many operations, particularly owner-operators. Returns over operating costs, the measure lenders watch most closely for the coming year, are considerably less negative and, for corn and soybeans at these price levels, may well be positive. Regional variation is also large: the diesel and fertilizer shocks fall hardest on irrigated rice and on cotton and peanuts in the Southeast and Delta, while the corn and soybean revenue gains accrue disproportionately to producers with crops to sell.

The Hormuz linkage itself should be read carefully. The report’s per-acre cost estimates isolate the fuel and fertilizer price change since USDA’s pre-Hormuz projections; they are estimates of the marginal shock, not a full accounting of 2026 costs, and they assume producers buy at current prices. Growers who prepaid fertilizer or locked diesel before March face smaller hits this year, but will meet the full shock in 2027 budgets, which is exactly where AFBF is pointing with its interest-rate warning.

Watch three things. 

First, whether the Bab al-Mandeb disruptions Newton flags widen into a broader Red Sea shipping problem, which would keep diesel and urea elevated through fall application season. 

Second, the Fed’s upcoming decision: another increase would raise the record $34 billion interest line and tighten 2027 credit conditions at the very moment lenders are re-underwriting operating loans. 

Third, USDA’s October WASDE and the first survey-based yield updates, which could either extend the corn and soybean revenue gains or, if yields disappoint further, add price support that the cost side has not yet erased.

Bottom line

Farm Bureau’s message is that higher prices are necessary but not sufficient. Per-acre revenue is up for corn, soybeans and rice, yet the Hormuz-driven jump in diesel and fertilizer, layered on record interest costs, keeps every major row crop below total-cost breakeven for 2026/27. Expect this analysis to anchor the argument for additional ad hoc assistance this fall and to shape how lenders approach 2027 operating loans.

AG POLICY & MARKETS DAILY   |   MARKET PERSPECTIVE  |  FARM BUREAU ANALYSIS — TUESDAY, SEPTEMBER 15, 2026