Fertilizer prices will stay above pre-Iran war levels through 2028, according to a new CoBank Knowledge Exchange report, keeping nutrient costs a major headwind for U.S. farmers, ag retailers and farm supply cooperatives for at least another year — and likely longer.

Prices have retreated from the historic highs recorded at the start of the war, but geopolitical instability in the Middle East, constrained feedstock supplies and tightening phosphate availability will prevent any return to earlier price levels.

"The ripple effect of the Middle East conflict, compounded with tight supplies, will create higher fertilizer prices and complicate sourcing well into 2027 and beyond," said Jacqui Fatka, farm supply and biofuels economist with CoBank. "Availability and affordability concerns have already triggered demand destruction and deferral, making the price outlook increasingly difficult to predict."

Fatka said market recovery will depend on stabilization in the Middle East, lower sulfur prices and shifts in global demand patterns.

Why is the Middle East so critical to nutrient supply?

The region supplies over 60 million tons of fertilizers and raw materials annually, with 45 million tons shipped through the Strait of Hormuz. The vulnerability runs deeper on specific commodities:

• 50% of globally traded sulfur originates from the region
• Over 30% of global urea exports come from the Middle East
• Three of the world's 10 largest ammonia exporters sit behind the Strait of Hormuz

For U.S. agricultural retailers, the Iran war has created the greatest price exposure on urea and phosphate, driven by demand for products imported through the Persian Gulf.

The conflict has forced plant shutdowns and damaged facilities that will take significant time and money to repair:

• An estimated 31 ammonia plants in the Middle East have been directly impacted or shut down completely
• Across India, Pakistan and Bangladesh, operations at 49 plants have been curtailed or halted on limited feedstock availability
• At least 20 plants in Russia have been damaged by Ukrainian drone attacks

How exposed are U.S. phosphate supplies?

Disruptions have reshaped trade flows and raised prices for U.S. retailers, particularly for diammonium phosphate (DAP) and monoammonium phosphate (MAP). Most domestic use comes from U.S. production, but 17% of DAP/MAP imports originate from the Persian Gulf — now one of the most unstable supply regions.

Phosphate markets should stay especially tight. Global supplies were constrained even before the war, and rising sulfur and ammonia costs have further limited production. Ammonia and sulfur are the two biggest variable cost inputs for phosphate manufacturing.

China, the largest producer and exporter of phosphate fertilizer, has banned phosphate exports through August, and high sulfur prices may extend that ban.

How are growers responding on the ground?

U.S. farmers have adjusted nutrient management strategies after several years of elevated prices. Rather than sharply cutting fertilizer use, many now lean on soil testing, variable rate application technology and precision nutrient management to protect yields.

Under-fertilization can cost more than high fertilizer prices. Many farmers have held nitrogen applications steady but cut phosphate and potassium rates by as much as 10-15% in recent years.

"Lower or no fertilizer use creates a two- to three-year gap before yield begins to suffer," Fatka said. "The question now becomes how much longer the mining of the soils can occur without sacrificing yield."

What happens if prices stay high this fall?

If fertilizer prices remain elevated through fall as expected, more farmers may push applications into spring. That shift would create logistical challenges for retailers managing tight planting windows and uncertain demand.

Lower global application rates could modestly reduce yields and support commodity prices, easing some inventory concerns for retailers — a partial offset, but not enough to relieve margin pressure on the input side.

CoBank's full report, "Why Higher Fertilizer Prices Are Here to Stay," frames the outlook as contingent on Middle East stabilization, sulfur price relief and shifting global demand patterns before U.S. farmers and cooperatives see meaningful cost relief.