By Mary Hightower
University of Arkansas Division of Agriculture
FAYETTEVILLE, Ark. — The surging prices of war-restricted fuel and fertilizer shipments through the Strait of Hormuz and Red Sea are expected to cost Arkansas farmers more than $343 million this year — and that’s conservative, according to an analysis from the University of Arkansas Division of Agriculture.
The analysis by Ryan Loy, assistant professor and extension economist, was released on Monday. Scott Stiles, extension economics program associate, provided research on the fuel and fertilizer prices. The research is supported by the Fryar Price Risk Management Center of Excellence.
“Fuel and fertilizer markets have been under pressure since the beginning of the Iran conflict, mainly because of disruptions at two shipping chokepoints,” Loy said. “Iran has largely blocked traffic through the Strait of Hormuz since early March, and in September, the strait has been seeing record low transits of crude oil tankers.
“At the same time, the Houthis resumed attacks on Red Sea shipping in July, adding to the strain on supply chains already hit by the Hormuz closure. Both routes are major corridors for crude oil and fertilizer,” he said.
Loy and Stiles’ price analysis of the diesel that Arkansas farms use for planting, harvesting, irrigation and other functions will be built in to the 2027 Crop Enterprise Budgets. This online tool is used by farmers to determine which crops will keep their operations afloat.
The 2026 Crop Enterprise Budgets, published in November 2025, were based on a diesel price of $2.46 per gallon. Farm diesel is not priced the same way as diesel used on highways.
“Based on weekly farm diesel prices, the 2026 year-to-date average now stands at $3.84 per gallon, and the average since the conflict began — from March 1 through Sept. 30 — is $4.22 per gallon, or 72 percent above budgeted expense,” Loy said. “Farm diesel averaged $4.17 during planting — 69.6 percent above budget — and $4.72 so far during harvest, which is 92 percent above budget.
”When the 72 percent fuel increase is applied to each of the state’s major row crop commodities, it adds:
- $34.22 per acre for soybeans
- $37.44 for cotton
- $40.33 for corn
- $49.61 for peanuts
- $74.94 for rice
As of Oct. 5, “the current price is $5.47, which is 122.4 percent above budget,” Loy said. “Highway diesel, used in farm trucks and delivery, is even higher at $5.94 currently and has averaged $4.93 over the farm season.”
“We consider this a conservative estimate since we do not weight fuel use toward planting and harvest, when usage peaks,” the two said. “Current harvest diesel prices are also well above the season average used in this analysis.”
Last month, Gov. Sarah Huckabee Sanders signed an executive order which temporarily allows farmers and loggers to use red-dyed diesel in their highway vehicles through late October 2026. The measure is meant to provide some relief on trucking costs over the next few weeks, while the bulk of this year’s added input costs remain.
Fertilizer
Urea is a fertilizer derived from petroleum. It was originally budgeted at $560 per ton for the 2026 season. As of May 2026, prices had increased roughly 39 percent, adding $37.39 per acre for cotton, $43.75 for rice, and $57.40 for corn.
“Combining the marginal increases in diesel and urea brings the estimated cost increases to $118.69 per acre for rice, $97.73 for corn, $74.83 for cotton, $49.61 for peanuts, and $34.22 for soybeans,” Loy said. “Peanuts and soybeans — both legumes that fix their own nitrogen — are assumed to have no urea-related expenses.”
According to the September acreage report from the National Agricultural Statistics Service, part of the U.S. Department of Agriculture, soybeans were up 860,000 acres to 3.45 million. All rice is down 383,000 acres to 901,000, with long grain down 400,000 acres. Corn is down 50,000 acres to 760,000, cotton is up 40,000 to 560,000, and peanuts are down 8,000 to 40,000 acres.
“Multiplying these acres by the per-acre marginal expense increases gives an estimated total of $343.18 million in additional costs to the state of Arkansas,” Loy said.
This breaks down to:
- $118.1 million for soybeans
- $106.9 million for rice
- $74.3 million for corn
- $41.9 million for cotton
- $2.0 million for peanuts
Listen to the Oct. 5 episode of the Morning Coffee and Ag Markets Podcast as Loy and fellow Extension Economist Hunter Biram discuss how ongoing shipping disruptions from the Iran conflict continue to raise fuel and fertilizer costs for Arkansas row crop producers.
The Morning Coffee and Ag Markets Podcast is a production of the Fryar Price Risk Management Center of Excellence.
To learn about extension programs in Arkansas, contact your local Cooperative Extension Service agent or visit uaex.uada.edu. Follow us on Facebook and Instagram. To learn more about the UADA, visit uada.edu. To learn more about ag and food research in Arkansas, visit the Arkansas Agricultural Experiment Station at aaes.uada.edu.
