The food inflation crisis will soon be all investors are talking about

By Kenneth Rapoza

As fertilizer costs hit 2026 highs and U.S. farmers cut planting, investors are looking to these stocks to hedge against food scarcity

A soybean farmer inspects his field in Cordova, Md., in 2025. American farmers are facing their most serious crisis since the 1980s.

Why agricultural shocks are the next market disruptor.

America is not starving. There's plenty of beef, wheat and eggs. At the moment, food inflation is lower than core inflation, but Americans are still living with higher prices, up around 20% since 2022.

President Donald Trump is right when he says the U.S. doesn't rely on the Strait of Hormuz for its agriculture needs. But Europe and Asia do - and so they will outbid American farmers for fuel and fertilizer, forcing food prices higher for everyone, including Americans.

Anyone who knows a farmer has heard stories of the "worst year ever" - but now American farmers are facing their most serious crisis since the 1980s.

Production costs were already rising before the Iran war and the closure of the Strait of Hormuz. Many farmers are still waiting on loans, unable to lock in fertilizer prices before they spiked.

A newly released Farm Bureau survey of 5,700 U.S. farmers said 70% of farmers won't be able to afford all the fertilizer they need this year. Many are reducing planted acres. This potentially means less food moving through the supply chain - and higher prices for what does make it to market.

The Ukraine war offers a parallel. Ukraine is a major exporter of grain and other agricultural needs. After Russia invaded Ukraine in February 2022, concern grew that Europe and Africa wouldn't get wheat, and that American farmers would fall short of fertilizer like urea and ammonium nitrate, which Ukraine sold globally.

What happened? Corn futures rose above $7 per bushel in early 2022 as commodities traders weighed fertilizer shortages and supply disruptions. Wheat prices surged to record highs above $13 per bushel in early 2022. But prices corrected in less than a year. Corn futures currently are about $4.80 and wheat futures are about $6.30.

Still, the Ukraine war does underscore how quickly grain markets can react when fertilizer supply and geopolitical risks collide. The price of urea, a key starting material in fertilizer, last month hit its highest point since September 2022.

For investors looking to add agriculture and commodities to a portfolio right now, the biggest stocks include CF Industries (CF), phosphate and potash miner Mosaic (MOS) and Canada-based Nutrien (NTR), along with smaller players such as CVR Partners (UAN), LSB Industries (LXU) and Intrepid Potash (IPI). Broader agriculture trades including Archer Daniels Midland (ADM) are strong anchors for investors who want to beat food inflation but do not want the risk of pure-play fertilizer stocks.

The market is also sensitive to signs of peak-margin anxiety on American farms. Last week's passage of the Farm, Food and National Security Act in the House of Representatives is a nice signal but provides no relief. The Senate has hinted it will take a legislative hammer to the bill; there's no timeline for the Senate vote.

USDA Secretary Brooke Rollins said last week that plans are in the works to increase access to fertilizer and lower prices via Jones Act waivers and Venezuela sanctions relief. But by the looks of things, this doesn't seem like it will bring much relief.

If geopolitical tensions continue to threaten maritime shipping through the Strait of Hormuz, the lesson from 2022 is clear: Input costs rise first; grain markets react next, food prices follow.

For now, U.S. agriculture is stable. Americans are not going to starve because of Hormuz. Yet risks remain. Fertilizer prices are much higher and global buyers are competing for the same goods. If that competition intensifies, American farmers won't be insulated - and neither will consumers.

Kenneth Rapoza is an analyst for the Coalition for a Prosperous America, which represents U.S. producers and workers. He is a former journalist who has reported from Brazil and covered the BRIC economies.

More: The secret to lowering gas prices in the U.S.? Selling American oil overseas.

Also read: The real endgame of the Iran war: America becomes the world's most secure oil power

-Kenneth Rapoza

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05-09-26 1503ET