Agri-Pulse’s Kim Chipman reported that “skyrocketing diesel costs are threatening to squeeze farm profits, just as U.S. crop growers were starting to catch a break. The average price of U.S. diesel reached a new all-time high of $5.94 a gallon on Wednesday, up four cents from the prior record set Monday over the travel-heavy Labor Day weekend, according to automobile club AAA. Prices are up 61% from a year ago.”
“Prices are spiking as farmers prepare to fire up fuel-hungry equipment for round-the-clock harvest work this fall. Soaring costs for crop inputs like fertilizer have bedeviled farmers over the last few years, helping trigger grain-market slumps,” Chipman reported. “Ag economists are predicting another downturn for key crops this year as Congress struggles to get billions of dollars in federal aid to growers on top of roughly $12 billion in payments from the Trump administration.”
“Yet in the last few months, a short-lived thaw in U.S.-Iran hostilities brought down fuel prices while a robust global appetite for U.S. corn and soybeans helped spur a rally in crop prices,” Chipman reported. “Last week, the Agriculture Department raised its forecast for 2026 farm earnings, citing higher receipts for key crops and government payments. But now, renewed attacks between Iran and the U.S. in the Middle East are pushing up fuel prices. The volatility has made it tough for ag producers to hedge against higher fuel costs.”
“‘The rise in diesel fuel is going to probably eat up what was able to be made there in the margins,’ Bradley Guse, Wisconsin-based director of BMO’s Agribusiness Group, tells Agri-Pulse,” according to Chipman’s reporting. “‘It’s nice to see the bounce in the corn market and bean markets, but it’s really hard to get excited about it when it’s not going to mean anything to the bottom line.’“
AgroLatam’s Emily Trask reported that “fuel is one of the most visible farm expenses because producers purchase it directly, but the actual economic impact extends much further.”
“Diesel is embedded in fertilizer delivery, grain hauling, livestock transportation, custom harvesting, machinery services and nearly every stage of agricultural logistics. When diesel prices rise, farmers can pay twice: first through their own equipment and again through higher freight and supplier charges,” Trask reported. “That multiplier effect can raise total input costs even for operations that have already contracted or hedged part of their on-farm fuel requirements.”
“The pressure comes at a challenging moment for crop producers. Commodity prices ultimately determine whether higher production expenses can be absorbed, but farmers have limited ability to pass fuel increases directly to grain buyers. If corn, soybean or wheat prices fail to rise alongside operating costs, higher diesel expenses translate almost immediately into weaker margins per acre,” Trask reported. “That makes fuel management, machinery efficiency, field logistics and precision agriculture increasingly important as growers evaluate which passes across a field are essential and where operational efficiencies can reduce gallons consumed without compromising yields.”
Energy Department Sharply Raises 2027 Diesel Price Forecast
Axios’ Rebecca Falconer and Ben Geman reported that “the Energy Department’s statistics arm on Wednesday sharply raised its forecast for U.S. diesel prices next year as tight global supplies keep domestic inventories unusually low.”
“The outlook suggests Americans could face elevated fuel costs well into 2027, as President Trump acknowledged Wednesday that oil prices may not fall until after November’s midterm elections,” Falconer and Geman reported. “U.S. diesel prices hit all-time highs this month, due to the Middle East conflict thwarting oil and petroleum product supplies, and Ukraine’s drone campaign targeting Russian refineries.”
“The latest Energy Information Administration outlook expects retail diesel to average $4.40 a gallon in 2027, up 33 cents, or 8.2%, from its previous forecast of $4.07,” Falconer and Geman reported. “… EIA also raised its 2026 forecast 22 cents to $5.07 a gallon.“
Additionally, Bloomberg’s Mia Gindis and Will Kubzansky reported that “US diesel stockpiles are projected to fall this month to their lowest level in over two decades, according to a new government report, as wars around the world, including one launched by Washington, choke flows from key export hubs.”
“Inventories of the workhorse fuel are expected to dip below 100 million barrels for the first time since 2003, according to the Energy Information Administration’s Short-Term Energy Outlook released Wednesday,” Gindis and Kubzansky reported.