In almost all cases, farmers get caught in the cross fire of military conflicts. When such conflicts involve key producers of agricultural inputs or their raw materials, the impact intensifies.
Markets react to uncertainty, and the war in Iran that now has over a dozen oil-rich Middle East countries involved bleeds unknown outcomes, including a certain timeline for ending. Significant sources of fertilizer and fuel have now been at least temporarily detained with the current high risk of setting sail through the Strait of Hormuz. Moreover, some oil refineries have been destroyed or damaged.
Prepaid fertilizer and fuel for 2026 will offer an economic advantage, if that’s your current situation. If not, the Iran conflict couldn’t have come at a worse time as spring planting season approaches and grass pastures, hayfields, cornfields, or cereals will soon need nitrogen.
The Strait of Hurmuz typically has about 30% of the world’s urea and 25% of the global demand for crude oil shipped through its waters. That shipping lane will need to be opened soon if the flow of these inputs is to be maintained. If not, availability may become a problem along with price.
According to barchart.com, the FOB futures price for March urea closed at $465 per ton on Friday, Feb. 27. By March 5, the same urea closed at $584.
Looking at retail prices, USDA’s Pennsylvania Production Cost Report indicated the average price for urea fertilizer in that state averaged $587 per ton for the week ending on Feb. 20. In the most recent report for the week ending on March 6, the average retail urea price had jumped to $720. Interestingly, there was only a slight upward movement in phosphorus and potassium fertilizers during the same period, but that trend may change, too.
A similar story is playing out for No. 2 diesel fuel. Its retail price has jumped by 70 cents per gallon or more since the war’s onset.
President Trump indicated he ordered the United States Development Finance Corporation to provide — at a reasonable price — political risk insurance and guarantees for ships traveling through the Persian Gulf. If necessary, he also noted that the U.S. Navy would begin escorting ships through the Strait of Hormuz. Only time will tell if these measures will be enough to start ships and products moving again.
In the meantime
There isn’t much farmers can do to change the economic woes resulting from actions taken on the world stage. The best anyone can hope for is to find ways to soften the financial impacts and avoid the cross fire.
Grasses need nitrogen to be productive in pastures or hayfields. What they don’t necessarily need is nitrogen with its beginnings in a Middle East oil field. Many graziers and haymakers make full use of the nitrogen provided by legumes in mixed stands. That type of system will pay big dividends in 2026.
Where pure grass stands need to be grown, finding organic forms of nitrogen such as manure may help ease the financial burden in the short term. If more urea is needed, remember that the first pound of nitrogen added yields a much greater return than the last pound added. This may be a year when the economic optimum nitrogen rate is somewhat lower than in the past.
For corn silage producers, if a field is following a terminated alfalfa stand, don’t waste money on expensive nitrogen fertilizer. Alfalfa is the gift that keeps on giving with respect to nitrogen credits, and it almost always gives enough for a first-year stand of corn. Even cornfields that are two years removed from alfalfa are recipients of significant nitrogen contributions.
It’s a bad time to have uncertain times that result in price volatility for agricultural inputs. Until markets become more certain, look for areas where fuel and fertilizer inputs can be saved without significantly compromising production.
