Faith Parum American Farm Bureau Federation
Fertilizer costs are having a bigger and bigger impact on farm budgets. In the lead-up to the 2022 crop year, fertilizer prices surged to records – driven by tight global supplies, energy shocks and trade disruptions. That period became a turning point in how farmers and policymakers thought about farm-input risks. Fertilizer prices eased somewhat in 2023 and 2024 as energy markets stabilized and supply chains recovered, but price volatility is at the forefront once again.
Current prices remain at less than the extreme peaks of 2022 but prices for several key fertilizers are increasing. Phosphate fertilizers are leading the increase, while nitrogen products are showing month-to-month swings and potash prices are increasing due to trade-policy risks. At the same time, the share of fertilizer within total farm-production costs has not returned to earlier inflated numbers because other expenses are also increasing. Livestock expenses, electricity, cash labor, interest, rent and property taxes are among the categories showing notable increases in 2025, adding to the overall pressure on farm budgets. Farmers are facing a familiar challenge – building budgets and making planting decisions with unpredictable fertilizer markets. This Market Intel updates current price levels, revisits the drivers of fertilizer markets and explores what they mean for 2026 farm planning.
Fertilizer prices changing
Phosphates have had the sharpest price increase this year. Gulf diammonium phosphate or DAP prices increased from about $583 per ton in January 2025 to almost $800 in August. That's a 36 percent increase in less than eight months, creating new strain for already-struggling crop budgets. Monoammonium phosphate or MAP has followed a similar trend, reflecting the same pressures in production costs and export availability.
Nitrogen markets have been mixed but still volatile. Urea prices increased sharply into the summer before easing modestly. Tampa ammonia settlements reached about $487 per metric ton in August and market indications suggest increased prices in September. Urea Ammonium Nitrate or UAN solutions have shown regional variation, with tighter supplies in areas farther from production hubs and import terminals. Regions closer to key river- or rail-transport routes have had more-consistent availability. Those swings highlight how quickly nitrogen prices can change in response to global trade and natural-gas markets.
Potash prices are also increasing compared to 2024. Global spot values hover at about $350 to $360 per metric ton, which is about 21 percent more than in 2024. U.S. wholesale prices have been further supported by concerns regarding tariff actions on Canadian imports. Currently, potash imports from Canada are subject to a 10 percent tariff.
While none of those prices are as severe as the extreme numbers recorded in 2022, the upward direction in 2025 is a reminder that fertilizer markets remain in flux and sensitive to global developments.
Fertilizer prices affected
Global trade policy is directly shaping fertilizer markets. The European Union began applying tariffs July 1 on Russian fertilizer imports. That move redirected Russian supplies toward other markets such as Brazil, India and potentially the United States. The shift tightened availability in other markets and supported global prices.
In North America, U.S. tariffs on Canadian goods have drawn attention because of the potential impact on potash. Canada supplies the vast majority of U.S. potash imports. Even without direct restrictions, the perception of risk has increased U.S. wholesale values, creating uncertainty for farm buyers.
China has also played a central role. Early in 2025 the Chinese government restricted phosphate and urea exports to protect domestic supplies. Those policies sharply reduced global availability and contributed to increased prices. China in July allowed more fertilizer exports after previously keeping shipments very restricted. That briefly increased global supplies, but China often changes its export rules with little notice – creating uncertainty for buyers and sellers worldwide. Each policy shift ripples quickly through international prices and eventually into farm budgets.
Importantly, fertilizer markets are shaped not only by short-term shocks but also by long-term structural risks. The industry is extremely concentrated. A small number of countries dominate nitrogen, phosphate and potash production, leaving supply chains exposed to geopolitical or logistical disruptions. Investments in new ammonia capacity are concentrated in countries with reduced-cost gas as well as in decarbonization hubs like the United States, Qatar and Nigeria. Europe, in contrast, has seen permanent fertilizer-plant closures due to inflated energy costs.
Potash supply is concentrated in just a few regions, with Canada, Russia and Belarus accounting for more than two-thirds of world exports. Phosphate production is dominated by Morocco, China and Saudi Arabia. For nitrogen, natural-gas supply – which is a key component in nitrogen fertilizer – remains the critical bottleneck. Those structural dynamics mean that geopolitical events, from sanctions on Russia to unrest in the Middle East, carry outsized impacts on farm-input costs worldwide.
The Russia–Ukraine conflict remains a defining backdrop for fertilizer trade. Russia is a top exporter of nitrogen, phosphate and potash; Belarus, aligned with Russia, is another major potash supplier. Sanctions and shipping restrictions from other countries continue to complicate trade. Although Russia has rerouted fertilizer to markets like Brazil and India, ammonia exports remain at more than 80 percent less than pre-war levels. Ukraine's domestic production has been severely disrupted, further tightening global availability. Ukraine typically produces nitrogen-based fertilizers, particularly ammonium nitrate, urea-ammonium nitrate and urea.
In the Middle East, increasing tensions between Israel and Iran have raised risks of regional disruption. The area is critical for global natural-gas and ammonia production, as well as contains shipping routes like the Suez Canal that connect fertilizer producers in North Africa and the Gulf with European and American buyers. Morocco and Saudi Arabia are also expanding phosphate capacity, making the region even more important for global supply security. Any instability that interrupts those flows can amplify the price pressures farmers already face.
Energy remains a critical factor in fertilizer prices because natural gas is the main feedstock for nitrogen fertilizer. In the United States, natural-gas prices are projected to increase into late 2025 and 2026 as liquefied natural-gas-export capacity grows. That means the baseline cost of producing ammonia, urea and UAN is more than it was in early 2024, when gas was relatively cheap.
In Europe, natural-gas prices are at far less than the crisis levels of 2022 but still remain volatile. Weather, storage levels and liquified-natural-gas shipments all influence prices. A cold winter or disruptions in liquified-natural-gas supply could quickly increase European gas prices, forcing producers to increase ammonia and urea prices that flow into the global market.
Taken together, geopolitical conflict, trade restrictions and increasing energy costs explain why fertilizer markets remain inflated and volatile despite the absence of the extreme energy shock of 2022.
Farmers feel impact
The return of inflated fertilizer prices has direct consequences for farm finances. As of late 2025, fertilizer costs are trending at more than 2024's levels and are expected to remain inflated into 2026. That increase comes at a time when crop receipts are shrinking, especially in major row crops, leaving farmers with thinner, even negative, margins.
Volatility is also expected to be a defining feature of the months ahead. Seasonal swings in natural-gas markets during the winter, coupled with shifting Chinese export policies, are likely to create added price uncertainty in the fourth quarter of 2025 and the first quarter of 2026. Markets can change direction quickly, making it difficult for producers to anticipate input costs with certainty.
Those increased fertilizer costs ripple beyond individual purchasing decisions and tie directly into broader farm-income trends. U.S. Department of Agriculture projections show overall production expenses increasing in 2025, with fertilizer and lime accounting for 7 percent of production expenses. At the same time, crop revenues are decreasing – a dynamic that compounds financial pressure on farmers. The result is an extreme squeeze on margins that is more-pronounced for row crops, where nutrient requirements and production costs per acre are higher.
The combined effect of increased expenses and reduced revenues is contributing to warnings of stress in the farm economy. Even though conditions differ across regions and commodities, the overarching pattern is clear. Farmers are entering another year in which volatile markets and tight, or negative, margins reduce their ability to accommodate increasing costs.
Conclusion
Fertilizer markets in 2025 look different than they did in 2022 but carry the same message for farmers – input costs remain extremely volatile. Instead of being driven mainly by energy shortages and shipping bottlenecks, current increases are rooted in trade uncertainty, natural-gas trends and regional conflicts. Concentration of supply in a handful of countries means that geopolitical risk has become a permanent feature of fertilizer markets. Fertilizer markets illustrate how global geopolitics directly influence U.S.-farmer bottom lines. The war in Ukraine continues to limit reliable exports, while tensions in the Middle East inject risk into global phosphate and natural-gas supplies.
For the farm economy, the year ahead points to another period of tight, or negative, margins shaped as much by input costs as by decreasing crop prices. The combination of increased expenses and weaker crop revenues is expected to weigh on overall net farm income, particularly for row-crop producers. Fertilizer remains one of the largest and most volatile expenses for crop production, meaning even modest swings in price can alter the outlook for profitability.
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