Ceasefire Impact on Agriculture
From the Ag Information Network, I’m Bob Larson. A two-week Iran war ceasefire and opening of the Strait of Hormuz is bringing new hope of relief for farmers and consumers.
Analysts expect volatile but gradual easing of fuel prices over the next several weeks if the ceasefire holds, tanker traffic resumes, and production is restored.
American Farm Bureau and former Senate Ag economist John Newton …
NEWTON … “All eyes are going to be on the progress over the next two weeks to see if the progress made was in the right direction. Obviously, the oil market moves very quickly. We saw how the oil market moved in response to this news.”
GasBuddy’s Patrick DeHaan says diesel and gas prices could start falling by a few cents a day, with diesel lagging slightly.
Newton agrees, a big drop will take time …
NEWTON … “When the Strait of Hormuz closed, we saw the most rapid increase in diesel prices in history, which farmers are paying. So, these markets are incredibly volatile. But again, the supply and demand factors on the ground are going to be what ultimately drive the prices that consumers pay, and farmers pay.”
Newton, meantime, says fertilizer prices will also depend on the Strait being open …
NEWTON … “Fertilizer availability, taking into consideration how long it takes to get a vessel from the Strait, the Middle East, to the United States, is going to take time. So, all eyes again, are on the next two weeks.”
But, even if the ceasefire holds, Newton says struggling producers will still need more federal help.
GasBuddy’s DeHaan says that the national average gasoline price could fall below four dollars in a week or two, and diesel below $5.68 in weeks.
