Events such as pandemics, geopolitical conflicts, and other large-scale crises interrupt global supply chains, energy markets, and trade flows. This creates rippling effects across many sectors, including agriculture. For example, since the COVID-19 pandemic, fertilizer prices have shown little to no sustained downward trends and remain persistently elevated. Given the economic and geopolitical conditions in 2026, it is unlikely that fertilizer prices will decline substantially or that commodity prices will increase dramatically any time soon.

Market Conditions

Nitrogen-based fertilizer prices are trending higher in Alabama both compared to last year and since the start of the war in Iran in late February. Nitrogen prices have seen a large spike between February 27, 2026, and March 20, 2026, according to the Alabama Production Cost Report released by the US Department of Agriculture Agricultural Marketing Service. Urea is up 7 percent and ammonium nitrate is up 5 percent over that period. Compared to the same period 1 year ago, urea is up 16 percent and ammonium nitrate is up 12 percent, suggesting the increase has been ongoing but has accelerated recently. There has not been an immediate effect on markets for other nutrients, as potash and phosphate prices have mostly been unchanged over the past month.

This increase in fertilizer prices may have a sizeable effect on producers who have yet to purchase or price fertilizer for the 2026 planting season. In this year’s Alabama Extension enterprise budgets, approximately 24 percent of corn-production costs are for fertilizer, with 17 percent attributed to nitrogen alone. For cotton, approximately 16 percent of production costs are spent on fertilizer, with 7 percent spent on nitrogen. Therefore, any sizable increase in nitrogen fertilizer prices may have a large impact on farm production costs across the state.

Another input price worth watching is diesel fuel, which is up 51 percent over the past month, increasing from $2.84 to $4.30 per gallon.

Global Factors Affecting Fertilizer Markets

The effects that the war in Iran have on agriculture are complicated. The blockade of the Strait of Hormuz is preventing the transportation of fertilizers that are crucial to large agricultural producers, such as Australia, Brazil, and India, which rely on imports from the Middle East.

The United States produces most of the nitrogen fertilizer it uses but imports natural gas from Canada as an input for nitrogen fertilizer production. Any disruption to natural gas markets could, in turn, affect US nitrogen fertilizer prices. Additionally, the United States imports some phosphate and urea through the Strait of Hormuz, meaning there could still be a direct impact from the closure.

Several events prior to the Iran war have also disrupted fertilizer markets, including the Israel-Iran conflict, the Russia-Ukraine war, and tariffs.

Key Management Areas

In times of elevated input costs and heightened uncertainty, risk minimization becomes paramount. Farmers must take a proactive approach to managing fertilizer input costs by maximizing the efficiency of the resources that are already available and identifying opportunities to reduce unnecessary expenses. The 4 Rs of nutrient stewardship are great to keep in mind.

• Right source. Match fertilizer or organic amendments to crop demands and soil conditions.
• Right rate. Calibrate rates based on realistic yield goals and soil test results.
• Right time. Use split applications to reduce losses and improve uptake.
• Right method. Use banding, incorporation, or sidedress applications where appropriate.

Operating at a loss is not a viable option, and profitability will increasingly depend on sound decision-making rather than aggressive input use. The following are key areas farmers should prioritize to manage risk and protect profit margins.

Soil Testing

Soil testing assumes a greater importance now more than ever before. It is a farmer’s first line of action, providing a realistic benchmark for crop nutrient requirements and helping farmers avoid unnecessary fertilizer applications. In many cases, a soil testing report may indicate that no additional phosphorus or potassium is required beyond what the crop removed from the soil.

Soil pH

Fix pH problems to get more yield per pound of applied fertilizer. Soil pH regulates nutrient availability and ultimately dictates yield potential. Maintaining soil pH within the optimal range (approximately 6.0 to 7.0) is critical because most nutrients are most available to plants under these conditions. Apply lime when a soil pH falls below 6.0.

Fertility Approach

Historically, many producers have followed a build-up fertilization philosophy, avoiding withdrawals from what is perceived as a soil fertility bank. In a year characterized by geopolitical instability and high fertilizer prices, it is prudent to reassess this strategy. Shift from a build-up philosophy to a maintenance or crop-removal approach. Apply nutrients strictly to meet a crop’s demand rather than to maintain surplus nutrient levels. Identify the fields or portions of fields where the nutrient levels are already sufficient and apply nutrients at the recommended rates.

Also, avoid products that make unsubstantiated claims of unlocking nutrients from the soil or so-called bug-in-a-jug solutions. These products typically do not provide meaningful nutrient contributions. Sound nutrient management is based on measurable inputs and proven processes. Resources are better spent on soil testing, proven fertilizers, lime, and effective management practices.

Yield Goals

Reevaluate your yield goals when experiencing high input costs. Use historic yield data and realistic weather scenarios to refine expectations. Prioritize profit maximization over yield maximization.

Crop Rotation and Cover Crops

Use crop rotation and cover crops strategically. Legume cover crops, such as clover and sun hemp, and residues from crops like peanuts and soybeans can contribute nitrogen to the soil. In many cases, producers can credit 30 to 40 pounds of nitrogen per acre toward the next crop.

Using Poultry Litter

Using poultry litter allows farmers to cut back on their fertilizer rates. However, nutrient concentrations in litter can vary widely, so regular testing is essential to accurately estimate the nitrogen, phosphorus, and potassium content within the litter. By knowing the nutrients levels in the litter, farmers will then know how much less fertilizer they need to use without sacrificing yield.

When using poultry litter, timing is critical. Applying litter 2 to 3 weeks before planting helps capture the initial flush of nitrogen release, improving early nutrient availability. Unlike synthetic fertilizers, poultry litter must undergo microbial decomposition before nutrients are available to plants. Nitrogen release occurs in two phases: a rapid release within the first 30 days and a slower mineralization phase afterward.

Relying solely on litter can pose risks during peak crop demand. Poultry litter should be integrated with commercial fertilizer applications at the appropriate rate and growth stage. For example, in cotton systems, a 2-ton per acre preplant litter application typically requires an additional 40 to 50 pounds of nitrogen per acre applied as commercial fertilizer at first square (when fruiting buds first appear). This approach can reduce synthetic nitrogen use while maintaining yield.

More Information

In today’s high-cost environment, profitability depends on precision rather than input intensity. By focusing on soil testing, realistic yield goals, efficient nutrient use, and proven management practices, producers can reduce risk, control costs, and maintain productivity despite ongoing market uncertainty.