Crop Inputs

Crop input updates

U.S. agriculture producers avoid fallout from dockworkers’ strike.

Oil prices held relatively flat in September, then spiked in early October on escalating conflict in the Middle East (a major producing region). Demand remains low due to weak economic activity and continues to offset some supply risks, including relatively low domestic inventories, production curtailments in Libya, and the Organization of Petroleum Exporting Countries’ decision to postpone production hikes. China announced a significant economic stimulus program; however, it remains unclear how successful these efforts will be. Russia continues to supply international markets, especially India and China, despite sanctions.

Dockworkers from the International Longshoremen’s Association (ILA) went on strike across 14 Gulf and East Coast ports on Oct. 1. A tentative agreement reopened ports on Oct. 3, extending the current contract through Jan. 15, 2025, and providing additional time to negotiate remaining issues. Should a permanent deal fail to be brokered, it has the potential to result in goods shortages, lower export volumes (14% of the nation’s agricultural exports), and supply chain bottlenecks (53% of national agricultural imports) as shipbrokers reroute vessels to West Coast ports. Lower diesel prices have helped soften transportation costs; however, trucking rates reportedly ticked up in September on higher demand. Dry bulk shipping rates increased 16% in September, in part due to rising U.S. grain exports. Container freight rates fell 14% due to lower export volumes out of China.

Fertilizer prices softened slightly in September due to weaker-than-expected demand and strong supply. Hurricanes Francine and Helene led traders to sit on the sidelines, and tropical storms in India reduced global demand for urea. Urea prices remain significantly above pre-pandemic levels, leading some analysts to wonder if global agricultural producers will reduce their use. Phosphate supplies are tightening as major producers, including the U.S., Morocco and China, shift their export strategies. Global potash supply is strong as Russia continues to supply international markets, particularly India and China.

Labor cost and availability are a top concern for producers across the West. Expanded worker protection rules under the H2A Visa Program and new thresholds for overtime in Washington and Oregon have added to the complexity and cost of sourcing labor.