URBANA, Ill. – A March 26 panel webinar presented by University of Illinois agricultural economists Nick Paulson and Gary Schnitkey examined how the ongoing conflict in Iran is impacting global agriculture. 

The farmdoc daily webinar was joined by industry experts who broke down the recent spikes in fertilizer and fuel prices. They discussed the immediate effects of the conflict on the 2026 crop year, the critical differences between this market shock and the 2022 Russia-Ukraine conflict, and what decreased input affordability means for farmer profitability heading into 2027.

“Since Operation Epic Fury began on February 28, we have all seen increased energy and fuel costs, along with the cost of fertilizers urea and ammonia, and phosphates and sulfur,” due to military restrictions on the key shipping channel Strait of Hormuz, Paulson began. “(The Middle East) is an area that is actually dependent on a lot of agricultural imports. That creates distinctions when we might want to compare how this international conflict might impact agricultural markets relative to what we saw as part of the Russia-Ukraine conflict that broke out in February of 2022.”

Citing data from the most recent Illinois Production Cost report and daily Illinois Department of Agriculture (IDOA) grain market reports as of March 20, Paulson noted that anhydrous ammonia was selling for $998.33 per ton in the state, an increase of $155 or 18.4 percent since Feb. 20, or one month, prior. According to Bloomberg/Green Markets, anhydrous prices had increased by around 15 percent, or $102, between Feb. 27 and March 25 across the Corn Belt.

“Nitrogen prices were inching up prior to the (Iran) conflict,” Schnitkey said. “We’re fortunately not at the $1,200 (per ton) level like with the previous (Ukraine) conflict. We were also seeing rising prices before the conflict with Russia and Ukraine happened.”

Urea originating from the Middle East rose to $822.50 per ton between Feb. 20-March 20 in Illinois, according to U of I’s data. This represents an increase of $241.50 per ton, or 41.6 percent, since the onset of the U.S.-Israel war on Iran.

“This is (from) Illinois Production Cost data that is bi-weekly,” Paulson explained. “If we compare that to the more current and daily data that comes from the Bloomberg terminal, it’s about a 38 percent increase in U.S. Corn Belt urea prices (and) a 51 percent increase in the Middle East from Feb. 27-March 25. Relative price increases are bigger in the Middle East but sizable increases are also impacting us in the Midwest.”

American production capacity for nitrogen – estimated at 19 to 20 million metric tons per year, enough to provide over 80 percent of domestic demand – is likely keeping urea prices from exploding here compared to prices in the Middle East, Schnitkey added.

“It seems the bids coming in from our retailers in the southern part of the state were a little higher. The northern half – say I-72 north into northern Illinois – were pretty static. We’re seeing a lot of movement in the south and some real steady runs in the mid to north-central part of the state,” said panelist Jim Raftis, ag market reporter for the IDOA. “Going back into the data for the last 15 years it seems like all of a sudden southern Illinois, or downstate Illinois spikes, and the rest of Illinois sort of follows that.

“Back in ‘08 we had a big nitrogen (price) spike, and on Oct. 21 we were about at the same level we are right now, $850 to $1,200 for anhydrous ammonia. That next week we were at $1,400-$1,600, but then it fell back. Oct. 21, 2021, same deal, so this is not necessarily a phenomenon – though it is shocking how quickly it is happening now.”

Some retailers who bid on bulk fertilizer purchases in late February prior to the start of the Iran conflict found their bids nullified and subjected to new and higher pricing, Raftis acknowledged.

A new analysis by farmdoc predicts that Illinois anhydrous fertilizer prices will top out at over $900 per ton in May, according to Paulson. “Even if the conflict ends in the next couple of days, these higher prices tend to be persistent and we should be expecting higher prices heading into the fall pricing period for the 2027 crop,” Paulson said, basing his remarks on market reaction in the two years following the start of the Ukraine conflict. “There is a pretty good chance we will see premiums above ($860 per ton).”

A continuation of current fertilizer pricing into the fall would render the 2027 production of corn, in particular, “a bit more difficult,” Schnitkey added.

Twenty eight percent-variety liquid nitrogen (UAN 28) had risen by 8.5 percent to $489 per ton from Feb. 20 to March 20, according to the Illinois Cost Production Report, an increase of $53.82. DAP fertilizers, at $840.75 per ton, increased by 1.5 percent, or $12. 31. An increase of 3.9 percent was also noted in the price of MAP fertilizers, to an average $892.50 per ton in Illinois, and potash, which increased by 2.3 percent to $500.18 per ton, the report found.

“We’ve seen fertilizer prices in general creeping back up since February of 2025 on most products that are tracked, but maybe a heightened increase since the start of the conflict at the end of February,” Paulson said, summarizing the relatively modest price increases in fertilizers not generally originating from the Middle East compared with anhydrous ammonia.

Perhaps carrying more wide-ranging implications than fertilizer prices, the panel turned their attention to out-of-control oil and diesel fuel prices that are also driving up farmers’ input costs.

“Though diesel fuel is not a huge component in cost budgets, the longer high fuel prices stick around, the higher the costs of all inputs moving forward,” said Paulson, citing a diesel fuel price increase of 34.7 percent to $4.23 per gallon between Feb. 20 and March 20 in Illinois. “I would expect this number to increase closer to $5 per gallon in that next production report.”

While many farmers may have already purchased their 2026 nitrogen fertilizers at last year’s rates, all farmers and farm families will be affected by rising fuel and energy costs due to the war, Schnitkey added.

Chuck Spencer, executive director of government relations for GROWMARK and the FS Cooperatives, said that the situation is unusual in that “anything” the president says related to the Iran conflict directly affects energy markets, causing volatility in both the stock market and direct consumer costs. “We are seeing in our system that we can get spring 2026 fertilizer to where it is needed,” said Spencer, a former policy adviser for the Illinois Farm Bureau. “I am not saying (farmers) are comfortable with the price.”

Gretchen Kuck, Washington, D.C., economist for the National Corn Growers Association, said the NCGA had been monitoring fertilizer prices with growing concern since late last year. A September 2025 survey of members indicated that 40 percent were already planning to cut back on fertilizer applications during the 2026 growing season. “We’ve had elevated prices since 2020 (and) we’re heading into our fourth year of projected negative net returns for corn growers, which makes it really hard on cash flow with these high production costs,” she said.

Slides from the March 26 farmdoc webinar, “Fertilizer and Fuel Risks as a Result of the Iran Conflict,” can be viewed at https://farmdoc.illinois.edu/webinars