June 23, 2026

Costs Going Higher in 2027

USDA’s latest Commodity Cost and Returns report shows production expenses are expected to climb for every major crop in 2026 as global energy and fertilizer market disruptions continue to ripple through agriculture. The report follows months of volatility tied to conflict involving Iran and concerns about shipping through the Strait of Hormuz. Higher fertilizer costs are adding pressure to already tight farm margins. The findings mirror a recent American Farm Bureau Federation survey in which 70 percent of farmers said they couldn’t afford all the fertilizer needed for the 2026 crop year. The outlook for 2027 offers little relief. USDA projects production costs will reach record highs for most major crops, driven by rising seed, chemical, labor, machinery, repair, and cash rent expenses. Rice is projected to have the highest production cost at $1,427 per acre, followed by peanuts at $1,248, cotton at $1,001, and corn at $952.

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CoBank: Dairy Heifer Inventories Will Rebound in 2027

The U.S. dairy herd has grown to its largest size in three decades, but the supply of replacement heifers is at its lowest level since 1978. That’s according to a new report from CoBank. It says dairy producers are increasingly breeding cows to produce beef-on-dairy calves rather than future milk cows, taking advantage of record-high cattle prices and strong beef demand. As a result, replacement heifer supplies are expected to tighten further in 2026 before beginning a recovery in 2027. Heifer prices have surged above $3,000 per head, prompting many dairies to keep older cows in production longer than usual. “On most dairy farms, net margins are currently being driven by the beef check, not the milk check,” said Corey Geiger, CoBank’s Lead Dairy Economist. “That shift is reshaping the U.S. dairy herd, most notably through the decline in replacement heifers.”

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Dairy Cooperative Applauds H-2A Guidance 

Dairy farmers may soon have a new option for hiring workers after the Trump administration announced guidance allowing dairy operations to access the H-2A visa program if they can demonstrate a temporary or seasonal labor need. Previously, most dairy farms were excluded from H-2A because milk production requires year-round labor. Under the new guidance, applications will be reviewed on a case-by-case basis using the same standards applied to other H-2A employers. Edge Dairy Farmer Cooperative in Green Bay, Wisconsin, welcomed the change, calling it an important step toward addressing long-standing workforce shortages on dairy farms. “As a dairy farmer, this move is an encouraging milestone to have access to a visa program and address our labor force needs,” said Heidi Fischer, the president of Edge Cooperative.  Fischer said reliable labor is critical to food production and urged Congress to continue pursuing permanent workforce reforms for the dairy industry. 

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Fertilizer Prices Will Take Time to Recover After Strait Opening

The fertilizer industry is welcoming the reopening of the Strait of Hormuz following a new agreement between the United States and Iran, calling it a positive development for farmers and global agricultural supply chains. The Fertilizer Institute says the waterway is a critical route for fertilizer and energy shipments. Roughly 40 percent of the world’s urea fertilizer and about half of global sulfur supplies move through the strait each year. “Farmers in the U.S. and around the world need this vital shipping lane open and operational,” said Corey Rosenbusch, president and CEO of the Fertilizer Institute. Despite the reopening, industry leaders warn supply chains won’t return to normal overnight. Tankers carrying oil are expected to receive priority, and damage assessments continue at production facilities throughout the region. TFI economist Veronica Nigh (NYE) said fertilizer markets may take months to fully recover from the disruption.

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Strong El Niño Could Mean Drier Weather Ahead

An exceptionally strong El Niño, expected to peak later this year, could set the stage for drought conditions across the Plains lasting well into the end of the decade, according to AccuWeather. Climate experts say there is a 70 percent chance the event reaches “Super El Niño” status. While El Niño often brings increased rainfall to the southern United States, history shows that major events can be followed by several years of drier-than-normal weather across the Plains. “After El Niño ends, the following two to three years can end up being significantly drier in parts of the Plains from Texas into the Dakotas,” said Paul Pastelok, chief long-range forecaster. “The stronger the upcoming El Niño conditions get, the longer it takes for weather patterns to return to their historical average.” Drought conditions are already worsening. Nebraska, Wyoming, Colorado, and Oklahoma have all seen sharp increases in areas classified as extreme drought compared to a year ago.

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No More Inertia: Pass Year-Round E15

The president of the National Farmers Union is urging Congress to approve year-round nationwide sales of E15 gasoline, saying the move would benefit both farmers and consumers. In a new Agri-Pulse opinion piece, Rob Larew noted that E15 is currently about 25 cents per gallon cheaper than standard gasoline and could save consumers more than $150 million this summer. Larew also said expanded E15 access would create a stronger domestic market for American corn growers by increasing demand for ethanol production. “E15 represents a scalable, durable domestic market for American crops — one that isn’t subject to trade disputes or fluctuations in export volumes,” Larew wrote. “The infrastructure exists, production capacity is in place, and farmers are ready to meet demand.” The group continues pushing the Senate to pass legislation allowing year-round E15 sales nationwide. Supporters argue the measure would provide lower fuel costs for drivers while creating additional market opportunities for U.S. farmers and biofuel producers.

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