Texas producers are facing a sharp rise in fertilizer costs this spring, adding pressure to already tight margins as global instability continues to ripple through agricultural markets.
Fertilizer prices, which remained relatively steady early in the year, began climbing in March amid escalating conflict in the Middle East and rising energy prices, said Texas A&M AgriLife Extension Service economists.
“Fertilizer is a global commodity, so when disruptions occur anywhere, prices tend to rise everywhere,” said Mark Welch, Ph.D., AgriLife Extension grain economist and professor in the Texas A&M College of Agriculture and Life Sciences Department of Agricultural Economics.
Nitrogen costs drive increases
Nitrogen fertilizers, which are critical for commodity crops like cotton, corn, sorghum, wheat and rice, have seen some of the largest gains.
Anhydrous ammonia prices rose from about $840 per ton in late January to roughly $1,100 per ton in early April, significantly increasing per-acre costs for producers, Welch said.
Other products have followed similar trends. Urea prices have increased about 48% since the beginning of the year, while prices for urea ammonium nitrate solutions are up more than 30%.
“These are significant increases, especially when commodity prices are flat or declining,” said Luis Ribera, Ph.D., AgriLife Extension economist and professor in the Department of Agricultural Economics. “That creates a real squeeze on profitability.”
Energy, global markets drive volatility
Fertilizer production is closely tied to natural gas, making prices highly sensitive to energy markets.
Rising oil and gas prices, combined with supply disruptions and transportation uncertainty, have pushed fertilizer costs higher despite strong domestic production.
“We’re more self-sufficient than we used to be, but we’re still tied to global markets,” Ribera said.
Timing matters for producers
The impact of rising fertilizer prices could vary depending on when producers secured inputs, Welch said.
In South and Central Texas, many producers had already locked in fertilizer purchases before the latest price increases. However, producers in later-planting regions, such as Texas’ High Plains, may still be exposed to higher costs, Welch said.
“If inputs were purchased early, some producers may have avoided the worst of the increases,” Welch said. “But those still buying are facing much higher prices.”
Unlike crop prices, fertilizer costs offer limited risk management options.
“Producers are price takers when it comes to inputs,” Ribera said. “There’s very little they can do to hedge against these increases.”
Outlook remains uncertain
Economists do not expect fertilizer prices to decline quickly, even if geopolitical tensions ease.
“Prices aren’t likely to fall overnight,” Welch said. “There are longer-term impacts that will keep costs elevated.”
That uncertainty is raising concerns for the 2027 crop year, when producers may face even higher input costs from the outset. With rising input costs and uncertain crop prices, many producers are expected to face tighter margins, and potentially increased borrowing and delayed investments.
“Most producers are not at a break-even point under these costs-versus-crop price conditions,” Ribera said. “That means more debt or using savings to get through the season.”
Panhandle
Dry, windy conditions persisted across the district, with red flag wildfire warnings common. Soil moisture ranged from very short to short. A few late-week showers provided relief and improved topsoil moisture for small grains where they fell. Earlier-planted wheat continued heading, with reproductive stages becoming more evident. Dual-purpose wheat fields were largely grazed, and some fields were chopped for silage ahead of corn planting. Wheat diseases were widespread. In general, winter wheat conditions were very poor to poor. Pasture and range conditions were very poor to poor.
