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Summary
On February 28, 2026, the United States and Israel coordinated an air attack on Iran. Market reactions were swift and reflected uncertainty over fuel and fertilizer movements in the Strait of Hormuz. In the weeks to follow, oil and fertilizer prices rose by nearly 50%. Predictions of corn prices for the year, likewise rose reflecting the potential cost increases. In this study, we attempt to quantify the potential economic impact while acknowledging the uncertainty over day-to-day changes in the war itself. Using USDA and futures price estimates from prior to and after the war, we incorporate these impacts into an equilibrium trade model and then use its outputs to generate economic impacts in an input-output model. Findings include:
• US corn growers stand to lose $6 billion in revenues and $4 billion in additional costs for an approximate $6 billion loss in profits (producer surplus) and an additional $3 billion loss to workers in the US corn production industry.
• Additional losses to the US economy along the corn supply chain amount to about $5 billion in lost revenue and an added $3 billion in lost sales related to general spending in the rest of the economy.
• The total loss in sales related to the US corn supply chain amounts to about $13 billion, of which about $10 billion is a loss to US gross domestic product.
• Losses to the state of Iowa would be approximately 15-20 percent of these losses based on Iowa’s share of the US corn market.