As US oilseed processors evaluate mid-summer 2026 crop forecasts, the ongoing Iran conflict continues to shape input costs, biofuel demand, and the outlook for US soybean production.
The fighting that began with US and Israeli strikes on February 28 disrupted shipping through the Strait of Hormuz — a critical chokepoint for roughly 20-30% of the world’s fertilizer exports, liquefied natural gas, and oil. Nitrogen fertilizer and diesel prices spiked just as US farmers finalized planting decisions for the 2026 season. Many responded by shifting acres toward soybeans, which require fewer nitrogen inputs than corn or wheat.
Those decisions are now showing up in the latest USDA crop projections. The July 2026 World Agricultural Supply and Demand Estimates (WASDE) report points to strong US soybean production this year, with higher planted acres combined with a solid average soybean yield per acre generating record output. Meanwhile, elevated energy prices continue to boost demand for soybean oil as a biofuel feedstock.
For soybean processors, the combination of ample supply and steady demand points to strong domestic crush opportunities. Yet intermittent ceasefires and renewed strikes keep energy markets volatile. In this update, we’ll examine the war’s impact on crop inputs and acres — and what it means for soybean crush margins heading into harvest.
Cost shocks shift acreage to boost US soybean production
When the Iran conflict closed the Strait of Hormuz in early March, US farmers felt the shock almost immediately. Nitrogen fertilizer prices jumped more than 30% within weeks, while crude oil climbed nearly 45%, topping $110 a barrel. In the Midwest, diesel rose from about $3.80 a gallon to more than $4.80.
Those price spikes arrived just as farmers were finalizing 2026 planting plans. Naturally, when fertilizer prices soar, nitrogen-intensive crops like corn and wheat become less attractive than soybeans, which largely fix their own nitrogen. Even before the current conflict, USDA’s February baseline projected that US farmers would plant 4.8 million fewer corn acres (94 million acres total) and 3.9 million more soybean acres (85 million total) in 2026.
Skyrocketing input costs reinforced this shift, and USDA’s June Acreage report confirmed it — as soybean plantings rose to 85.4 million acres, up from the March Prospective Plantings estimate. But the boost in US soybean production didn’t come entirely from corn. Most of the extra soybean acreage came from wheat, which was likewise hit by steep nitrogen prices — forcing USDA to slash over a million acres of wheat from its Prospective Plantings estimates. If realized, this could be the smallest US wheat crop in more than five decades.
Of course, not every farm felt the same price pressure. Growers who had already bought fertilizer before the conflict were largely insulated against rising costs. Still, the economics favored soy over nitrogen-heavy crops. The net result was higher US soybean production, setting the stage for larger crush volumes and stronger oil and meal supplies heading into the 2026/27 marketing year.
Record US soybean production supports strong crush demand
USDA’s July 2026 WASDE report shows US soybean production headed for a record 4.475 billion bushels this year, with a higher harvested area of 84.4 million acres and a steady 53-bushel average soybean yield per acre. Total soybean supplies are expected to rise as higher production more than offsets lower beginning stocks.
Abundant supply, along with strong global demand, are also boosting the market, with soybean exports expected to increase by 30 million bushels to 1.66 billion. Despite the increase in supplies, strong demand should keep inventories steady, with ending stocks unchanged at 310 million bushels for MY 2026/27. Soybean crush remains unchanged at 2.75 billion bushels for 2026/27 — nearly 4% higher than the current year and 12% higher than the 2.45 billion bushels crushed in 2024/25.
Price forecasts are likewise unchanged, as the average soybean price sits at $11.40 per bushel — the highest since the 2023/24 season. Meal and oil prices are projected at $310 per short ton and 70 cents per pound, respectively.
Soybean demand typically slows during the third quarter, following heavy exports during the first half of the year. However, processors posted historically strong crush margins in Q3 as the demand for soybean oil surged — driven by renewable diesel production under EPA mandates and higher oil prices tied to Strait of Hormuz closures. Overall, the combination of larger supplies and steady domestic demand sets the stage for solid crush volumes heading into MY 2026/27.
As a major biofuel feedstock, soybean oil prices are often tied to petroleum. When crude prices rise, alternative fuels gain popularity — lifting soy oil values to protect crush margins. For example, soaring crude markets in May pushed soybean oil prices (and crush margins) to the highest levels since Russia invaded Ukraine in 2022. Processors saw the other side of that coin in late July when the US paused its strikes against Iran, causing soybean oil futures to drop 2% in a single day as crude prices fell. These moves underscore how closely energy markets and soybean oil demand are intertwined.
Trade flows, biofuels, and near-term outlook
China remains the wild card in soybean trade flows. After buying 985 million bushels of US soybeans in 2024 — roughly half of all US soybean exports — tariffs pushed China to import beans from Brazil and Argentina instead, as US shipments to China fell to 218 million bushels last year.
A late-2025 agreement committed China to buy at least 25 million metric tons of US soybeans each year for the next three years (about 920 million bushels). However, residual tariffs still complicate the picture, while Brazil and Argentina continue to dominate global supplies. Unfrozen Iranian assets have also been discussed as an additional outlet for US soybeans, corn, and wheat — although any volumes would be modest.
Domestic biofuel demand also supports US soybean production. Elevated crude prices tied to Hormuz disruptions, together with EPA biofuel mandates, fuel soybean oil’s popularity as a feedstock for renewable diesel and biodiesel. That demand has helped maintain near-maximum US crush capacity and protect margins even when export volumes soften.
Looking ahead, a shorter or resolved conflict would ease fertilizer and fuel costs while moderating biofuel premiums. A prolonged disruption, on the other hand, would keep energy and input costs elevated and continue to favor soy over corn and wheat — but it would also add uncertainty around freight costs. Soybean processors should watch these three signals closely:
- the recovery of traffic through the Strait of Hormuz
- the August WASDE update from USDA
- the pace of US soybean exports to China
Even amid the ongoing geopolitical turmoil, record projections for US soybean production and resilient domestic crush demand paint an optimistic outlook for processing throughput.
For questions about US soybean production and processing, contact Anderson International — the world’s oilseed extraction experts.