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U.S. – Iran MOU pauses conflict, ag deals with ongoing market volatility and input cost shifts

The U.S. and Iran have signed a Memorandum of Understanding to end the war, and an ag economist says the ripple effects are impacting the ag sector.

Frayne Olson with North Dakota State University Extension says there’s frustration among some farmers, because grain futures have moved lower. He says grain futures are connected to the energy complex.

“In my opinion, we’re still going to have uncertainty and volatility in the markets simply because we don’t know how geopolitically this is going to turn out and a lot of things can still happen,” says Olson. “We’re very hopeful. We’re optimistic that yes, we have some stability, but that’s not a guarantee.”

The Strait of Hormuz is mentioned in the recent MOU, with Iran agreeing to facilitate the safe passage of commercial vessels in the Persian Gulf and Sea of Oman during a 60-day negotiation period.

Olson tells Brownfield there’s also some optimism in ag as nitrogen fertilizer prices begin to ease at ports and in domestic markets. He says farmers should be thinking about booking fall fertilizer needs and consider propane and natural gas.

“If we have a wet fall here in the north, some frost damaged corn or some corn that’s high moisture, that can really add to the total cost per acre very quickly, especially if propane or natural gas prices are very high,” says Olson. “I’m not saying that’s going to happen, obviously, but it is something that we need to be paying attention to pretty closely.”

Olson says he remains cautious as negotiations between the two countries happen, and he encourages farmers to monitor the situation.

The U.S. and Iran are scheduled to begin formal negotiations on Friday.