The surge in urea fertilizer prices, driven in part by tensions affecting energy and shipping routes in the Middle East, is forcing many U.S. farmers to rethink their planting strategies for the upcoming season. Across several states, growers are increasingly pivoting toward soybeans, a crop that requires significantly less nitrogen fertilizer than others such as corn, rice, or cotton.

The shift is largely explained by soybeans' biological advantage: they can fix nitrogen from the atmosphere, meaning farmers do not need to apply urea-based fertilizers to maintain yields. In a year marked by high input costs and tight margins, that difference is becoming critical for farm profitability.

According to Hunter Biram, extension agricultural economist with the University of Arkansas System Division of Agriculture, producers are reevaluating their crop enterprise budgets to determine which crops offer the least financial risk.

Farm enterprise budgets are tools developed by agricultural extension services to help farmers calculate potential profits or losses before planting. By adjusting variables such as fertilizer costs, seed prices, and commodity values, growers can simulate different scenarios and decide which crop mix makes the most economic sense.

Current projections suggest that soybeans may offer the least negative returns among major row crops. Under a typical crop-share agreement, economists estimate a return close to negative US$5 per acre, which, although still a loss, remains more manageable than the outlook for other crops requiring heavy fertilizer inputs.

Soybean acreage could jump sharply

Agronomists believe soybean acreage could increase significantly this season, particularly in states like Arkansas.

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Jeremy Ross, soybean agronomist for the state's extension service, estimates that soybean plantings could exceed 3.5 million acres, a potential increase of roughly 900,000 acres compared with 2025.

Such an expansion would mark a sharp turnaround after the previous season, when soybean area fell to 2.6 million acres - the lowest level recorded since 1960.

Lower production costs are a key driver of the renewed interest in soybeans. Growers are also receiving forward bids above US$11 per bushel for the 2026 crop, giving producers more confidence to lock in sales early.

Rice and cotton acreage likely to fall

While soybeans gain ground, other crops appear to be losing acreage.

Rice farmers in particular are reconsidering planting plans because nitrogen fertilization is directly tied to rice yields, making the crop especially vulnerable to rising urea prices.

Agronomists report that some producers have already begun returning rice seed orders as they reassess the economic outlook for the crop. In some regions, analysts are now questioning whether rice plantings will even reach 1 million acres this year.

Cotton is also expected to decline sharply. Industry surveys indicate cotton acreage in Arkansas could drop by about 30% to roughly 362,000 acres, potentially the lowest level in more than a decade.

Low cotton prices - currently below 70 cents per pound - combined with high input costs are eroding profitability for producers.

Corn remains another crop heavily dependent on nitrogen fertilizer, which means rising urea prices could discourage some growers from expanding corn acreage.

However, corn markets have recently shown some strength. New crop corn futures climbed above US$4.80 per bushel, the highest levels seen since mid-2024.

Part of that support comes from the energy sector. Stronger oil prices are renewing interest in ethanol blending, particularly the expansion of E-15 gasoline, which contains 15% ethanol made primarily from corn.

If year-round E-15 use expands across the United States, it could create a significant new demand channel for corn, potentially stabilizing acreage decisions.

Fertilizer prices tied to energy markets

The volatility in fertilizer markets is closely linked to global energy supply chains.

Urea production depends heavily on natural gas, particularly liquefied natural gas (LNG). Disruptions affecting LNG exports - including tensions affecting shipping routes through the Strait of Hormuz - have contributed to tighter supply and higher fertilizer prices.

Similar spikes have occurred before. Fertilizer prices surged in 2021 and 2022 amid geopolitical tensions and export restrictions, and earlier increases were seen in 2008 and 2012 due to strong demand from corn and ethanol markets.

Analysts warn that if energy disruptions persist, fertilizer prices could remain elevated throughout the growing season.