Matt Badiali

By
 Posted

This Grain’s Price Is About To Pop

The most common crop grown in the U.S. is also the single biggest consumer of nitrogen fertilizer. And, thanks to the Farm Lobby, it gets added to everything from gasoline to animal feed to candy.

Here’s the thing, 94% of ethanol comes from this crop. And as it gets more expensive, so will gasoline.

If you guessed corn, you are right.

And higher corn prices mean inflation for us. Besides ethanol, corn goes into the cost of raising animals, particularly beef. It becomes high-fructose corn syrup, which is the ubiquitous sweetener in everything.

The problem is that the price of nitrogen exploded, as you can see from the chart below:

image 1

Corn is the most nitrogen-intensive crop in the United States, and it isn’t close. Corn consumes about 78% of the nitrogen applied to grain crops like wheat, soy, etc. And the cost of that fertilizer is up over 30% from last year.

Corn needs about 150 pounds of nitrogen fertilizer per acre. In 2025, that was around $59 per acre. Today, according to the U.S. Department of Agriculture, that jumped to $78 per acre. by a wide margin, accounting for about 78% of all nitrogen fertilizer applied to major field crops (corn, soy, wheat, etc.).

The reason that nitrogen fertilizer costs so much today is the war in Iran. Natural gas is critical to making ammonia, which is the feedstock for nitrogen fertilizer. You can see the process in the diagram below:

image 2

But if you can’t get natural gas, you can’t make fertilizer. And that’s where we are today. The war in Iran and the closure of the Strait of Hormuz crippled nitrogen fertilizer supplies to the world, including the U.S.

Nitrogen fertilizer made up to 25% of the cost of corn prices. However, as we can see from the chart below, corn prices are at multi-year lows. If past is prologue, we can expect to see corn prices rip higher like they did in 2022:

image 3

Back in 2022, Russia invaded Ukraine. That cut off Russian natural gas to the world. It spiked the price of nitrogen fertilizer and sent the price of corn to multi-year high prices. The Teucrium Corn Fund (NYSE: CORN) is a great way to play rising corn prices. As you can see, the price is up about 4% YTD.

If the past can tell us the future, then it’s going much higher. If we’re going to pay extra on everything due to higher prices, we might as well hedge that cost by making some money on this trade.

The Daily Reckoning