By Nicole Zhao and Tom Polancik

NEW YORK/CHICAGO (IL) June 9 (Reuters) - High energy costs are weighing heavily on grain and soybean farmers across the U.S. agricultural belt, as a war with Iran chokes fuel supplies through the Strait of Hormuz and pushes diesel prices to record highs in key farming states.

Many farmers were already under pressure before the outbreak of the war and are now facing shrinking profit margins for the fourth year in a row, affected by the return of drought, high input costs and the fallout from US President Donald Trump’s trade policies that have negatively impacted crop prices.

The war pushed diesel prices in several states across the Midwest, the main corn and soybean producing region in the United States, to new record highs in May at a time when farmers ramped up planting and other fieldwork in the spring.

Diesel prices reached $5.873 per gallon in Wisconsin, $6.167 in Indiana, and $6.14 in Illinois in mid-May. Data from the American Automobile Association indicates that Ohio and Michigan set record highs.

The average price of diesel nationwide has risen by more than 40 percent since the outbreak of war in the Middle East. Global crude oil prices, which underpin diesel and gasoline prices, have jumped by about 30 percent since late February.

Diesel is used on American farms to power equipment needed for vital operations, from spraying pesticides and planting seeds to fertilizing fields and harvesting crops.

Unlike other sectors that can switch between fuel types, most agricultural machinery in the United States is designed to run on diesel, making farmers highly vulnerable to fluctuations in diesel prices.

"It's a huge cost," said Glenn Branco, who grows soybeans and raises cattle in Wamigo, Kansas. "There's not much we can do about it, and we weren't budgeting for it. It came out of nowhere and caught us off guard."

Ben Cliffe, an analyst at Benchmark, citing University of Illinois estimates, said that before the war, fuel-related expenses represented about three to four percent of the input costs for the average Illinois farmer, or between $16 and $23 per acre.

He added that fuel-related costs could rise to five to six percent of total input costs, or an average of $20 to $30 per acre for field crop farmers if diesel prices remain at their current level.

He continued, "The current situation is extremely difficult for field crop farmers... The prices of the grains they grow have fallen sharply in the past few weeks and are actually lower than pre-war levels with Iran, while input costs such as diesel and fertilizers remain much higher, leading to an increasingly declining profitability."