China is shielding its farmers from the global fertilizer price surge in April 2026, as its coal-based urea production keeps domestic costs low despite supply disruptions caused by the Iran conflict-highlighting a growing divide in global input markets and potential risks for U.S. producers.

While farmers in the U.S., Australia, and other regions are adjusting crop plans due to rising nitrogen costs, China's agricultural sector remains largely insulated thanks to abundant domestic urea supplies and government-controlled pricing dynamics.

Unlike major fertilizer exporters such as Russia, Qatar, and Saudi Arabia-where urea is produced using natural gas-China relies on coal for approximately 78% of its urea production.

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This structural difference is proving significant in today's market. Coal remains cheaper and more domestically available in China, reducing exposure to volatile global energy markets and supply disruptions tied to geopolitical conflicts.

As a result, Chinese urea prices are roughly one-third of international benchmarks, with domestic prices near $255-$267 per ton compared to $700-$780 globally.

This cost advantage allows Chinese farmers to maintain fertilizer-intensive cropping systems, particularly for corn, without the margin pressure seen in other countries.

Global Fertilizer Markets Tighten Amid Iran Conflict

Outside China, fertilizer markets are experiencing sharp volatility. Urea prices have surged about 70% since late February, driven largely by disruptions in shipping routes through the Strait of Hormuz, a key artery for global fertilizer trade.

The impact is already visible in planting decisions. U.S. farmers are expected to reduce corn acreage-one of the most nitrogen-intensive crops-and shift toward soybeans, while Australian producers are favoring crops like barley that require less fertilizer input.

These adjustments reflect a broader trend: input costs are increasingly dictating crop mix decisions, with nitrogen availability becoming a central factor in farm profitability.

China Maintains Supply-and Control

China's domestic market remains stable not only due to production capacity but also because of policy intervention. Authorities have:

• Restricted fertilizer exports
• Released strategic reserves early
• Maintained tight control over domestic pricing

Production is expected to reach a record 76.5 million tons of urea in 2026, up more than 6% year over year, while domestic demand is estimated at 66 million tons.

Additionally, nine new plants are set to come online, adding nearly 5 million tons of capacity, further strengthening supply security.

Export Restrictions Could Tighten Global Supply

Despite ample production, analysts warn that China is unlikely to significantly increase urea exports in the near term, prioritizing domestic affordability over global supply.

Historically, China exports around 5 to 5.5 million tons annually-roughly 10% of global trade-but current policy signals suggest continued .

"If China starts exporting, local prices would quickly align with global levels," analysts note, a scenario Beijing appears determined to avoid.

This stance could have ripple effects across global markets. Countries heavily dependent on imports, such as India-which sources over 40% of its urea and related fertilizers from the Middle East-are already seeking additional supply options.

For U.S. producers, the divergence is significant. While Chinese farmers benefit from stable input costs, American growers face elevated fertilizer prices tied to global energy markets and geopolitical risks.

This imbalance could influence:

• Crop selection decisions
• Input cost management strategies
• Global competitiveness in commodity markets