Producers Endure Costly Input Price Spikes in 2026
July 6, 2026 For row crop producers across the nation, late winter and early spring are key seasonal windows for fertilizer sourcing. Just as producers are making their final cropping decisions for the coming planting season, they will also think about plant and soil nutrition.
But in 2026, this final run-up to planting was packed with a confluence of circumstances that made fertilizer sourcing an especially painful undertaking.
“We are seeing, this spring, really the highest Urea prices that we’ve seen since, you’d have to go back to 2022, when we saw the Ukraine and Russia war break out,” says Scott Stiles, Extension economist at the University of Arkansas. “Prior to that, you’d have to think about maybe 2008, when we saw a spike in energy prices — seems like crude ran close to $150 a barrel that July, and fertilizer prices spiked as well.”
Stiles says there is a natural seasonality to Urea pricing. In a typical year, there is a seasonal low in December and January. In a healthy American cotton market, many farmers would utilize this window to source and book their fertilizer.
But in an industry where stagnant cotton prices had flatlined in the .60-cent range across all of 2025, many producers were forced to wait later in the year to make input decisions.
“It was a combination of a few things,” says Stiles. “The depletion of working capital in the last few years was one. People were waiting for loan decisions. A lot of lenders were still working on crop loans in March.
“They were waiting for things like Farmer Bridge Assistance monies to flow, and things like that. All of that interfered with peoples’ ability to pre-pay.”
An early-April survey from Farm Bureau revealed that only 19 percent of Southern farmers (a segment that included Cotton Belt states stretching from the Southeast to Texas) reported pre-booking their fertilizer in 2026. The same survey, featuring respondents across all crops, revealed that 78 percent of Southern producers were unable to afford all needed inputs this season.
War in Iran
Against this backdrop, the United States opened its war on Iran in late February, a move that almost immediately served to shut down shipping in the critical Strait of Hormuz, where much of the world’s fuel and fertilizer must pass through.
According to University of Arkansas data, Urea prices spiked some $150 per ton higher in the days immediately following the outbreak of the war on February 28. Urea prices eventually peaked at an average of $850 per ton in mid-April — up from an average of $598 per ton in the days before the war began.
That window between late February and mid-April covers a key planting window for many row crops in the southern U.S., including corn and soybeans. By mid-May, when much of the cotton crop was being planted in the Mid-South, Urea prices had dropped to an average of $785 per ton — a decrease from a month prior but still significantly higher than pre-war averages.
Similar to fertilizer prices, fuel prices spiked following the outbreak of the war in Iran. Stiles says the diesel market peaked in the back half of March, when farm diesel rose to roughly $4.50 per gallon.
“Again, this was right before planting time — there was planting going on in the Mid-South of pretty much everything except cotton by that point,” says Stiles.
The price spikes could be linked directly to Iran’s retaliatory closure of the Strait of Hormuz — a commercially busy passageway that stretches just 22 miles wide at its narrowest point.
“It’s a very narrow waterway, and it’s highly impactful for both fuel and fertilizer,” says Marc Rosenbohm of Terrain Ag. “A fair portion, in percentage terms, of either of those globally traded products ships through this one narrow passageway.”
Rosenbohm says the time-sensitive, inelastic nature of demand for both fuel and fertilizer played a significant role in the volatility of their respective price levels throughout the spring.
“We count on that product to flow when it needs to flow,” Rosenbohm says. “With disruptions there, we have to have prices that ration that demand in the short run at least, and so that’s part of why we see the high volatility of those prices, on the expectation of what does or doesn’t flow in any of those products.”
Some saving grace
If there was any silver lining for cotton producers, it was that the cotton market finally saw some movement across the late spring, eventually peaking near .88 cents per pound in May.
Rosenbohm, who tracks on-farm operating margins in his work at Terrain Ag, took note of all these moving parts in the Spring and noted that, despite everything, he expected cotton to emerge in more profitable shape than it had been in before the outbreak of the war.
Stiles believes the long-awaited bullish movement in the cotton market was a saving grace for many producers in Arkansas.
“In mid-May prices had run to 88 cents, roughly, and so we had a 20-cent move,” Stiles said. “That happened during this run-up in fuel and fertilizer, and that was a God-send, really.”
Still, conditions remain challenging for most farmers. Stiles has run profitability scenarios for cotton production in Arkansas and said that he believes .80-cent prices are needed to cover all variable costs in his state.
“That’s just break-even for us in Arkansas, and that’s not contributing anything to equipment,” he says. “That’s the fix that we’re in. So, we’re dependent on things like the safety net, PLC, and the gins paying seed rebates back to the growers.”
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