OMAHA (DTN) -- Farmers were caught off guard by the near-instant disruption the war with Iran has caused to fertilizer markets.

The war in Iran and the broader Middle East is hitting "just as America's farmers begin to put seeds in the ground for spring planting," the American Farm Bureau highlighted Monday in a letter to President Donald Trump.

Fuel and fertilizer prices are rising amid disruptions to shipping through the Strait of Hormuz.

"We're being told that many farmers that haven't pre-ordered their fertilizer and paid for it may not even obtain the fertilizer they're going to need during the season and for spring planting," said Zippy Duvall, a Georgia farmer and president of the American Farm Bureau Federation. "That's why this situation is so serious."

With fertilizer and fuel prices rising amid a growing war in the Middle East, AFBF on Monday called on President Donald Trump to protect fertilizer shipments through the Strait of Hormuz and suspend countervailing duties on imported fertilizer.

AN IMMEDIATE FERTILIZER PRICE SHOCK

Farm Bureau leaders discussed the crisis Monday in a Zoom call with journalists, stressing they've had multiple conversations with White House and USDA officials about the impact of the war on input costs. That includes talks about potentially more ad-hoc aid, even as $11 billion in Farmer Bridge Assistance (FBA) payments are being sent to farmers to help with 2025 crop losses.

"I'm afraid a lot of farmers are not going to be able to finance putting a crop in, and it could not come at a worse time," said Harry Ott, president of the South Carolina Farm Bureau.

Ott, who grows cotton, corn and peanuts, said his own fertilizer dealer last week would not price or deliver fertilizer. Ott was then told prices for delivery would increase significantly, even though that fertilizer was already staged for local delivery when the war broke out.

"That means I was already being charged $150 to $200 a ton for urea fertilizer that was already in his warehouse," Ott said.

Urea makes up about 50% of the nitrogen Ott applies to his corn and cotton crops. The higher urea prices will add roughly $100 an acre to his costs -- expenses he had not anticipated just two weeks ago. He noted farmers were already facing $100-an-acre or more losses on crops such as cotton, corn and soybeans before being told fertilizer could spike if they hadn't pre-paid for it. Along with higher urea prices, higher diesel prices will cause suppliers to tack on fuel surcharges as well.

"That's the disappointing prospect that we in agriculture are looking at. We're being asked to grow a crop with hardly any chance of making a profit."

Ott added he's never had an issue with a shortage of pre-plant fertilizer. Ott said he still doesn't think there is a real shortage of fertilizer right now in the Southeast, but fertilizer companies are pricing in higher costs for existing supplies.

"What we're asking for is simply some fairness in the system," he said. "If you've already purchased it, it's in your warehouse, as we farmers would ask these distributors -- don't make an additional profit on us during these really hard times."

John Newton, chief economist for AFBF, said a lot of farmers had cut back on locking in their fertilizer purchases earlier in the season. Newton said he had talked with a North Dakota farmer who had about 60% of his fertilizer needs priced. "They went in and booked the remaining, but it was -- significantly higher, about $200 a ton higher -- which increased their fertilizer bill by nearly $20,000."

FERTILIZER, OIL PRICE SWINGS

Analysts and others have been watching price swings for moving fertilizer domestically since the war began. The price for a short ton of urea in New Orleans to load on barges has gone up nearly 25% since the start of hostilities -- rising from $465 a ton on Feb. 27 to $580 a ton on Monday.

"The supply chain shocks are expected to drive already record-high input prices even higher at a time when farm margins are already extremely tight and many farmers are underwater," Duvall said.

Duvall called on fertilizer companies to act responsibly and "avoid price gouging or optimizing their pricing that would further strain our farmers who are already under tremendous financial pressure."

U.S. Census Bureau data shows the U.S. imports about 5 million metric tons of urea on average. Russia and Qatar are the largest exporters to the U.S. Urea makes up between 15% and 20% of total nitrogen demand.

The near-closure of the strait's shipping lanes has also prompted countries such as Kuwait to cut oil production. Brent crude oil prices on Monday briefly hit $110 a barrel -- the first time prices have gone above $100 since spring 2022 -- before settling at just under $99 a barrel. Oil prices were closer to $72 a barrel before air strikes began on Feb. 28.

AFBF CALLS FOR TRUMP TO ACT

In a letter to Trump, Duvall warned the war could lead to food-inflation spikes comparable to those seen in 2022. Acting quickly to avoid disruptions in fertilizer supplies will help prevent farmers from facing additional financial strain, he explained. "We are deeply concerned that failure to act could lead to disruptions to the food supply chain not seen since 2022 when food price inflation reached 40-year highs," Duvall wrote in the letter to Trump.

Duvall's letter pointed out the economic challenges facing farmers. "The supply chain shocks are expected to drive already record-high input prices even higher at a time when farm margins are already extremely tight and many farmers are underwater."

Grain and oilseed futures saw their own price rallies late last week, but grain futures were down nearly across the board on Monday.

Farm Bureau leaders noted high fertilizer costs run the risk of disrupting farmer planting intentions just as spring planting is preparing to begin.

"Anecdotally, farmers are already considering reducing corn acres planned in exchange for crops like soybeans that are less exposed to fertilizer price volatility," stated AFBF's Market Intel report.

As DTN tracks weekly, fertilizer prices at the end of February were already moving up before the conflict began. Fertilizer prices were already roughly 15% higher than a year ago despite relatively stagnant commodity prices. Urea was 12% higher than last year before hostilities began Feb. 28.

Farm Bureau's letter recommended Trump take multiple actions to protect the fertilizer supply chain and reduce market disruptions:

-- Direct the U.S. Navy to protect shipping lanes not only for oil, but also for fertilizer through the Strait of Hormuz.

-- Work internationally to maintain open shipping lanes to reduce supply chain disruptions.

-- Leverage programs through the U.S. International Development Finance Corp. to offer insurance or address other financial barriers for ships carrying fertilizer.

-- Ensure U.S. port, rail and barge capacity is available to quickly ship fertilizer to rural America, including granting a waiver of the Jones Act to help improve domestic shipping between ports

-- Add sulfur, sulfuric acid, phosphoric acid, anhydrous ammonia, aqua ammonia and calcium nitrate to exemption lists for tariffs, duties or other trade restrictions.

-- Use presidential authority to temporarily suspend countervailing duties on imported fertilizer products "to moderate price increases." The U.S. still has countervailing duties on phosphorus products from Morocco and Russia that the Commerce Department is expected to begin reviewing this month.

AFBF Market Intel report on fertilizer: https://www.fb.org/….

Chris Clayton can be reached at Chris.Clayton@dtn.com

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