Just as planting season is starting, inputs have taken a drastic increase. Fuel and fertilizer are getting the most conversation time, but essentially everything has gone up in the past year. In what is shaping up to be one of the most interesting springs in agriculture, there’s a lot to unpack.
The most recent Prospective Planting reports published by the USDA forecasts that 3.45 million fewer acres of corn will be planted, representing a 3% decrease. Wheat is also expected to be down 3%. In contrast, both soybean and cotton are expected to show a 4% increase. In comparison to previous reports, the 2021 report called for 91.1 million acres of corn while the 2026 report is calling for 95.3 million acres, even with the anticipated decline. Soybeans have an indication of 2.9 million more acres than in 2021 and 2.6 million more acres of wheat. Cotton shows a 2.4 million acre decrease since the 2021 report.
While these forecasts have yet to come to fruition, there is one major contributing factor—drought. With each passing day, the national Drought Monitor is shaping up to tell a drastic story this summer. Under current conditions, the beef industry is going to have to navigate this year with the smallest cow herd in over 70 years. With talk of retention and herd rebuilding, it doesn’t appear that the cow-calf producer will get to make the decision of whether or not to retain heifers.
Mother Nature might be dictating that decision as a producer eyes his heifer calves and then his hay storage for the upcoming year. As of this writing, over 80% of the nation was under drought conditions. The state of Oregon is averaging less than 50% of snowpack. High-capacity cow herd states in the South and Midwest are seeing record-low moisture and record-high heat. Prayers to those producers who have been impacted by fires—in March. That is still difficult to comprehend.
Those heifer calves will be worth quite a bit as feeder calves this summer and fall. I’d expect many to go to town. The question will be if the dam must go with them. The last thing I want is for producers to have to continue to reduce inventory, but they may not have a choice. A lot of feedlot pens across the country are already spoken for with cows and calves. As one producer told me, “It took too much to try to build the cow herd back; we can’t just turn around and sell them. Hopefully these calf prices hold and justify locking them up this summer.”
If the fundamentals were left alone, this market is easy to see it will be a good year to market cattle. That said, oftentimes we’ve seen issues out of our control as the reason for a market correction. It can be as simple as an ill-phrased quote by the president and the market trips. As of now, global conflict is throwing a gut punch into our fuel prices. This impacts everyone, and the impact is intense. As farmers and ranchers were out doing spring work, added fuel expenses of 30-40% were tacked on. Row crop producers have had a run of tough markets—this adds a lot of red to their operating expenses.
In late March, in one of the most head-scratching quotes to come from D.C., USDA Secretary Brooke Rollins said that increased fertilizer prices amid the war will not impact the majority of U.S. farmers and that 80% of farmers “had already purchased their fertilizer by last year in preparation for planting season.” She went on to say there “shouldn’t be too much disruption” from the increase in fertilizer costs.
While this administration has been more ag-friendly than we’ve seen in the last several, there continues to be comments like these that make me step back. While they’re making progress on reduced regulations, a favorable tax climate and grazing issues, farmers are still forced to pay 30% more in fuel and 20-30% more in fertilizer. This conflict hurts American farmers and ranchers right when natural climate conditions are already unsettling.
While the Prospective Plantings report showed some interesting data, farmers are running daily breakevens right up until planting day. This is going to impact markets this summer because producers may switch crops at the last second. What it means is that we won’t really have a good handle on actual acreage until later this year.
Row crop and cattle producer Shane Ryan of Illinois told me, “With margins already tight, and in many cases negative, going into the ’26 growing season, higher fuel and fertilizer costs have turned agronomic decisions into risk management decisions. Because of that, crop rotations, breakevens, and yield goals will be adjusted throughout the year, leading to a more turbulent marketing season.”
Cattle producers are going to be dealing with their own set of issues, so I’d recommend any effort to add value to calves will be worthwhile this summer. That extra few dollars might go to buying hay you’ll have to truck in from outside your trade area. Wrapping up, we’d better pay close attention to our surroundings and make the most informed decisions possible. While this market stays good for now, it doesn’t mean it’s going to stay easy. — LOGAN IPSEN
