Iowa farmers face a summer of unknowns as global conflicts evolve
June 4, 2026 | Aaron Putze, APR
With summer’s unofficial arrival, there’s no shortage of issues impacting Iowa farmers and the price of U.S. commodities.
To get a handle on the current economics of ag impacted by global conflicts, interest rates and farmland prices, I called on Jim Knuth, sr. vice president of lending for Farm Credit Services of America. Knuth brings more than four decades of ag lending experience to the table in service to the financial cooperative’s more than 21,000 farmer members.
An expert's perspective
What’s your take on the current economics of Iowa agriculture as we move into summer and, all too soon, harvest season?
The general sense right now is “wait and see.” Most people don’t like hearing that, but it’s simply too early to speculate too much about how the year will ultimately play out. There’s still a tremendous amount of uncertainty surrounding global markets, fertilizer availability, interest rates and geopolitical tensions. What does seem increasingly clear is there will be a significant divide between producers who locked in their inputs early and those who waited. Farmers who secured fertilizer and other inputs months ago are likely in a much stronger position than those who didn’t and are having to manage substantially higher input costs.
How much concern is there surrounding the Iranian conflict and fertilizer markets?
A great deal, primarily because this is unprecedented territory. The Strait of Hormuz has never been closed before, so there really isn’t a roadmap or timeline anyone can point to with confidence as to how this will play out. While the situation certainly impacts the United States — roughly 20% of our fertilizer inputs are tied to the region — it may create even greater challenges for global competitors like Brazil. Brazil imports roughly 85% of its fertilizer and relies heavily on double-cropping systems that demand significant nutrient application.
This situation raises important questions in terms of how it will affect production costs and yields and international competitiveness between the U.S. and South America producers.
What advice are you giving farmers during this time of economic and global uncertainty?
The advice remains largely unchanged from what we’ve consistently encouraged over time.
First, maintain strong short-term risk-bearing capacity — in other words, retain adequate working capital to navigate volatility and uncertainty. Second, keep your debt at sustainable levels meaning the amount of term debt works not only during strong economic cycles for ag, but during more difficult ones as well.
Sound marketing decisions and focusing on fundamentals continue to matter tremendously.
This current environment presents one of the largest question marks agriculture has faced in quite some time, particularly given the uncertainty surrounding global shipping lanes and fertilizer availability and prices.
How might fertilizer and input purchasing habits change going forward?
We expect many farmers will be less aggressive with fertilizer prepaying than they were heading into 2026. In fact, the 2027 crop year could potentially reward patience, depending on how markets normalize.
Right now, nobody fully knows what that “new normal” looks like. There’s also growing global debate surrounding the idea of tolls and disruptions tied to international waterways, which adds another layer of uncertainty to global trade and input costs.
How are farmland values responding to the volatility in ag?
Through May, we’ve seen relatively little change in land values or sale prices. Investor-driven purchases have become less common, meaning most buyers today are other farmers. There are willing and able buyers prepared to purchase farmland, a sign of the ongoing financial strength in ag.
What’s your outlook on interest rates?
We expect the current interest rate environment to continue through 2026. Many had anticipated variable rates would begin moving lower, but persistent inflation — amplified by global instability and the Iranian conflict — has largely pushed those expectations off the table for now.
There’s debate about whether current inflation pressures are temporary, but the Federal Reserve’s emphasis today appears more focused on fighting inflation than stimulating employment. While there’s a new Federal Reserve chair who philosophically favors lower short-term rates, the fed’s independence means rate cuts still must align with broader economic realities. As a result, we expect variable rates to remain relatively steady. We also believe longer term rates will continue to remain relatively flat with the 10-year treasury benchmark being in the mid to low 4% range. That’s why a farm’s debt structure must work in today’s environment — do not depend on the hope of significantly lower interest rates arriving soon.
Despite the uncertainty, are you optimistic about the future?
Guardedly. Farmers are resilient. Many producers made good business decisions by locking in costs last fall, and those decisions are likely to pay dividends moving forward. We are certainly living in interesting times, but the stability in land values tells an important story. When nearly all the buyers in the market are farmers, it signals enduring confidence in agriculture and in the future of Iowa and Midwest farming. That doesn’t remove the uncertainty, but it does provide reason for cautious optimism.
Written by Aaron Putze.
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