Iran War Continues To Create Fertilizer Uncertainty

There is a wide variation in the number of crop producers across the United States that had all of their 2026 fertilizer needs already booked and paid for prior to the initiation of the current U.S. conflict in Iran. Producers that did not have all of their likely fertilizer needs in place for the 2026 crop year prior to March may be experiencing some challenges in securing adequate fertilizer supplies for crop production this year. Farmers that needed to purchase all or part of their fertilizer needs this Spring have also faced much higher fertilizer costs. This further expands the financial challenges for farmers that were already facing very tight or negative breakeven crop production margins for the 2026 growing season.
 
The countries in the Persian Gulf region are major producers of many types of fertilizer that are used around the World for crop production. The region is a major producer of nitrogen fertilizer, which is very important for the production of corn, wheat, cotton, and other crops. Approximately 49 percent of the urea and 30 percent of the anhydrous ammonia in the World, which are both important nitrogen fertilizer sources, are shipped through the Strait of Hormuz each year. In addition, about 44 percent of the sulfur and 16 percent of the phosphate fertilizer is shipped through the Strait annually. Since early March, very little fertilizer has been shipped through the Strait of Hormuz. Any impacts on these fertilizer resources not only affects the U.S, but impacts nearly every major agricultural country in the World.
 
The United States relies both on fertilizer produced domestically, as well as imports from other countries, to meet the fertilizer needs for crop production in the U.S. The impact of outside conflicts, such as the war in Iran, varies by the fertilizer nutrient. The U.S. imports approximately 13 percent of the nitrogen and 16 percent of the phosphate that is used on annual basis, which could be subject to global trade disruptions caused by the current war. The U.S. also imports about 95 percent of the potash fertilizer used in crop production; however, a large majority of the potash is imported from Canada. In fact, over 50 percent of all fertilizer imports into the U.S. comes from Canada, compared to less than 10 percent of imports from the Persian Gulf region. Other major crop production regions in the World, such as South America, Europe, and some Asian countries are much more reliant on the Persian Gulf fertilizer exports than the U.S.
 
The American Farm Bureau Federation (AFBF) conducted a “Fertilizer Availability Survey” in early April and received responses from over 5,700 farmers across the U.S. Based on the survey, 67 percent of farmers in the Midwest States had already secured their fertilizer needs for the 2026 crop year; however, that still left one-third of producers with the need to purchase some or all of their fertilizer for the coming growing season. Farmers in the Midwest region, which is the primary corn and soybean production area in the U.S., tend to do more pre-booking of fertilizer needs prior to planting season, compared to other areas of the country. The early-April rates for meeting 2026 needs were much lower in other areas of the U.S., with only 19 percent of the fertilizer purchased in Southern States, 30 percent purchased in Western States, and 31 percent purchased in Northeast States. This difference reflects differences in the crop mix and management practices in the various regions of the country.
 
The AFBF survey results also revealed a wide difference by farm size in the percentage of producers that still needed to secure their fertilizer needs for 2026, following the impacts from the war in Iran. In all regions of the U.S., the larger farms (2,500 acres or more) had a much higher percentage of this year’s fertilizer needs pre-booked by early March, compared to the small sized farm operations (under 500 acres). In the primary corn and soybean production area of the Midwest, over three-fourths of the large farms (2,500 acres and more) and medium size farms (500 to 2,499 acres) had their 2026 fertilizer needs pretty well in place. This compared to less than half of the small farms (less than 500 acres) with their 2026 fertilizer needs secured. In the other regions of the U.S., 25 percent or less of the small farms had their fertilizer needs in place for the current growing season at the time the survey was conducted.
 
Update on Fertilizer Prices
The World fertilizer industry is controlled by a few very large, multi-national fertilizer companies, which tend to set prices for most fertilizer nutrients on a worldwide basis. This means that even though the U.S. may not import large quantities of certain fertilizer nutrients from Persian Gulf region, the price increases caused by the shipping restrictions in the Strait of Hormuz will likely still impact all fertilizer prices in the U.S. For example, if countries that rely heavily on Persian Gulf fertilizer sources are forced to go elsewhere to meet their needs, it will likely increase nutrient costs in those countries. In addition, if fertilizer supplies get tight, some countries may restrict exports or put extra export fees or tariffs on fertilizer that is exported to the U.S.
 
The cost of all types of nitrogen fertilizer and phosphate increased significantly following the initiation of the war in Iran and have stayed quite high into mid-May. The price of Urea, a major nitrogen fertilizer source in the U.S., increased by about 43 percent, or over $250 per ton, from late February until mid-May. The average price per ton of anhydrous ammonia and other common nitrogen fertilizer products also increased by over $60 per ton or about 31 percent from late February until mid-May. The cost of most forms of phosphate fertilizer has increased by around 8 percent since the initiation of the conflict in Iran; however, the average cost of phosphate fertilizer in mid-May of 2026 has increased by over 15 percent from cost levels a year earlier. Potash is the only major crop fertilizer nutrient that has not had much of price impact since the war in Iran began.
 
Even before the initiation of the war in Iran, the average 2026 fertilizer cost for corn production in the Midwest was estimated to be $20 to $30 per acre higher than fertilizer costs in either 2024 or 2025. Fertilizer cost represented 15-20 percent of the total cost of production for raising corn in the U.S. in every year from 2010 to 2025, except in 2022. That year, the rate was 25 percent of corn production costs, following the higher fertilizer costs that resulted from the outbreak of Russian War in Ukraine. Fertilizer analysts are now estimating that fertilizer expense will average 21 percent of the 2026 corn production cost; however, there will likely be a wide variation among producers, depending on when they made their fertilizer purchases for the current crop year. The combination of much higher fertilizer and fuel costs, together with increases in other crop input expenses, has resulted in most crop producers showing negative estimated net returns over costs for the 2026 crop year, based on average crop yields and current market price projections.
 
Final thoughts on the changes in Fertilizer Supplies and Prices
It appears that approximately three-fourths of farmers in the Midwest had already locked-in their fertilizer needs and costs for the 2026 growing season by early April. For those producers, the recent rapid increase in fertilizer costs may have a minimal impact on their fertilizer expense for the current year. However, fertilizer costs could be much higher for farmers that needed to purchase all or part of their fertilizer needs since the war in Iran was initiated in March this year. Some farmers may also choose to lower their 2026 fertilizer application rates due to fertilizer availability and cost. Farmers and grain marketing analysts will be watching closely to see if the current fertilizer situation causes any adjustments in the final 2026 planted corn and soybean acres later this year.
 
If the war with Iran continues for several months, or if the conflict expands to include other countries, the fertilizer supply and cost issue could become even worse for the 2027 crop year in the U.S., as well as in many other countries. Many Midwest farmers will start lining up their fertilizer needs and pre-paying fertilizer expenses for the 2027 crop year by early Fall this year. For many producers, fertilizer prices will be higher for the 2027 crop year than they are in the current year. There are currently few indications thar farmers will receive higher market prices for their 2026 crops later this year, or in 2027, to help offset the higher fertilizer prices.
 
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For additional information contact Kent Thiesse, Farm Management Analyst
Phone --- (507) 381-7960; E-mail --- [email protected]