A new white paper from the Agricultural Risk Policy Center (ARPC) at North Dakota State University examines how the 2026 closure of the Strait of Hormuz could affect the profitability of corn, soybean, and wheat production in North Dakota. The study highlights how simultaneous increases in fertilizer and fuel costs are placing additional pressure on already weakened farm margins.

The paper, Projected Impact of the 2026 Strait of Hormuz Closure on Corn, Soybean, and Wheat Profitability in North Dakota (ARPC White Paper 2026–05), authored by Rwit Chakravorty, Shawn Arita, and Sandro Steinbach, evaluates how disruptions in global fertilizer and energy markets translate into farm-level economic outcomes.

The study's findings show that the closure led to sharp increases in key input costs, including fertilizer and diesel, creating a two-channel cost shock for producers. Corn and wheat were already in negative margin territory prior to the shock, and the additional cost pressures further reduce profitability. Corn is particularly affected due to its dependence on nitrogen fertilizer, while wheat experiences smaller but still negative net impacts.

“What makes this situation especially challenging is that it’s hitting at a time when margins were already under pressure, and prices haven’t increased enough to offset rising costs,” said Rwit Chakravorty.
Soybeans, while less exposed to fertilizer price increases, are still affected through higher fuel costs, resulting in modest declines in net returns. The analysis also highlights that current crop price increases are insufficient to offset rising production costs.

“Even when producers have pre-purchased some inputs, they remain exposed, especially to fuel costs, which can’t be locked in the same way,” said Shawn Arita.

In addition, a March 2026 producer survey indicates that although many farmers pre-purchased fertilizer inputs, a substantial share remains exposed to higher spring prices, and fuel costs remain fully exposed regardless of purchase timing.

The findings suggest that the 2026 Hormuz shock differs from previous disruptions by occurring in a period of already weak margins and limited price response, increasing financial pressure on producers and raising important considerations for risk management and policy.

The ARPC White Paper is available through the Agricultural Risk Policy Center at North Dakota State University: https://tinyurl.com/ya6vun6b

Media Contact:
Agricultural Risk Policy Center (ARPC)
North Dakota State University
arpc@ndsu.edu
https://www.ndsu.edu/agriculture/arpc