Initial Response of Fertilizer and Fuel Price Spikes on Farm Costs and Returns 

The ongoing conflict in the Middle East has created volatility in fertilizer prices. While the duration of the conflict is hard to predict, the prolonged rise in energy prices (crude oil and natural gas) can have an impact on the price that U.S. agriculture producers pay for fertilizer. In turn, this can impact farm profitability at a time when margins are razor thin. 

The Fertilizer Institute noted that 65% of overall U.S. agricultural nitrogen (N), phosphate (P), and potassium (K) needs are sourced by domestic production. However, the remaining 35% is supplemented by imports. Measured as the percent of imports relative to consumption, the U.S. imports 6% of its N needs- mainly from Trinidad and Tobago and Canada; 13% of its P needs from Peru and Morocco; and 94% of its K needs from Canada, Russia, Belarus, and Israel (Monaco, Schnitkey, and Paulson, 2025). Therefore, exposure to the global fertilizer market can lead to significant price volatility when geopolitical conflicts arise.

By examining fertilizer and fuel costs associated with corn, cotton, rice, and soybean production in Louisiana, a comparison is made between early January and mid-March prices. The early-January fertilizer and farm diesel expenditures were revisited by using the March 13, 2026, USDA AMS Alabama Production Cost Report’s diesel price and average bids for urea, DAP, and potash fertilizers. The price increase varies across nutrients, with N (urea) increasing by 27%, followed by K (potash) at 10%. Interestingly, DAP (P) declined but did show a relatively large price range ($756 to $1,075 per ton) in the weekly USDA report. Fuel prices increased from $2.85 to $4.04 per gallon, a $1.19 (42%) increase. 

Table 1. Fertilizer input unit prices ($ per pound of active ingredient), January and March estimates.

The level of fertilizer and fuel needs varies by crop nutrient requirements and irrigation method/frequency. For Louisiana crops, per-acre N needs are the highest in corn (210 pounds) and hybrid rice (150 pounds), while cotton requires 90 pounds and soybeans require none. P and K needs are relatively consistent among the selected crops at 60 and 40 pounds per acre. The suggested fertilizer rates for poly-pipe and flood irrigation applications were obtained from the LSU AgCenter. Tables 2-5 provide a January and March comparison of production expenditures for these energy-related inputs on a dollar per acre basis. 

Table 2. Corn, cotton, rice, soybean fertilizer and fuel expenditures per acre, January and March estimates for Louisiana production. 

For example, Louisiana corn fertility cost increased by $34 while diesel fuel for tractors, implements, and irrigation pumps increased by $21 per acre. In total, corn’s energy-related input costs increased by almost $55 per acre. Cotton’s energy-related input costs increased by $41 per acre. From Table 4, the energy-related input costs for rice increased by $78 per acre due to the paddy flood irrigation practice. Since soybeans received no N, the cost increase was the lowest at $14 per acre. 

As economic conditions in the farm economy remain a concern for producers, restrictions on cash flows have acted to reduce the amount of inputs producers may pre-book earlier in the year when fertilizer and fuel prices were lower. This is an example of how geopolitical unrest and market distributions can affect local farming profitability. 

Translating this production cost increase as a function of increased yield, a producer would have to yield an additional 11 bushels of corn per acre (at a price of $5.00); 111 pounds of cotton lint ($0.70 price); 6.4 hundredweights of rice ($12.20 price); and 7 bushels of soybeans ($11.80 price). As Louisiana benefited from favorable production conditions in 2025, further increases in yield per acre would likely exceed state records. While this information is specific to Louisiana, the application of partial enterprise budgeting can be applied to other states. This economic analysis understates the fact that, given the current farm economic conditions, generating additional per-acre production to compensate for increasing production costs is difficult even with a moderate improvement in commodity prices. 

References

Deliberto, M. and B. Hilbun. “Projected Costs and Returns for Corn in Louisiana.” LSU AgCenter, January 2026.

Deliberto, M. and B. Hilbun. “Projected Costs and Returns for Cotton in Louisiana”. LSU AgCenter, January 2026.

Deliberto, M. and B. Hilbun. “Projected Costs and Returns for Rice in Louisiana.” LSU AgCenter, January 2026.

Deliberto, M. and B. Hilbun. “Projected Costs and Returns for Soybeans in Louisiana.” LSU AgCenter, January 2026.

Monaco, H., G. Schnitkey, and N. Paulson. “U.S. Fertilizer Industry in Global Markets: Structure and Supply Risks.” farmdoc daily (15):137, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, July 29, 2025. https://farmdocdaily.illinois.edu/2025/07/us-fertilizer-industry-in-global-markets-structure-and-supply-risks.html

The Fertilizer Institute. ““Pressure Cooker: Competition in the Seed & Fertilizer Industries.” Written remarks of Mr. Corey Rosenbusch, President and CEO of The Fertilizer Institute, before the U.S. Senate Judiciary Committee. October 28, 2025.  https://www.judiciary.senate.gov/imo/media/doc/57806f69-9cd2-0a74-ac7a-d2b236ce9e3b/2025-10-28_Testimony_Rosenbusch.pdf

USDA, AMS. “Alabama Production Cost Report”. March 13, 2026.

Deliberto, Michael. “Initial Response of Fertilizer and Fuel Price Spikes on Farm Costs and Returns.” Southern Ag Today 6(20.1). May 11, 2026. Permalink