A method and apparatus for agricultural product production with heat and moisture control with optional heat and moisture recovery. Some embodiments transfer heat and moisture from a warm, moist exhaust air stream to incoming agricultural material, steam condition the material, pelletize the material into warm pellets, cool the warm pellets with make-up air to produce the warm, moist exhaust air used to transfer heat to the incoming material and to produce cooled pellets, wherein the cooled pellets are at a temperature lower than the warm moist air. In some embodiments, the system includes counter-flow devices to transfer heat and moisture. In some embodiments, a controller is used to adjust system devices and overall system flow. In some embodiments a water sprayer, to moisten agricultural product when the product is over dry, and an air flow controller, to slow air flow through the pellet dryer/cooler when ambient temperatures are dryer/cooler, are provided.