Iran Conflict, Fertilizer Markets, and the 2026 Growing Season: What Ag-Drone Operators Need to Know

ADI has been tracking the conflict in Iran to understand its impact on the 2026 growing season for the agricultural drone community. The effects on fuel prices are self-evident, and fertilizer price spikes have received some coverage, but this article aims to explain what is driving these increases and what to anticipate in the coming months.

The effective closure of the Strait of Hormuz has removed nearly half of global urea exports from the market, coinciding precisely with America’s spring planting window. Cascading damage to refining capacity across the Gulf will have lasting consequences for two of agriculture’s main inputs: fertilizers and fuels.

The damage to Qatar’s Ras Laffan Liquid Natural Gas (LNG) refinery represents a structural loss to global LNG and helium supply that will persist for three to five years. Qatar produces approximately one-third of the world’s helium, extracted as a byproduct of LNG production, which further strains semiconductor manufacturing, in turn impacting the price of ag-drones and components.

Natural Gas and Fertilizer

Natural gas constitutes approximately 80% of nitrogenous fertilizer production costs. Prior to the conflict in Iran, Wood Mackenzie projected global LNG supply would grow by 35 Mt in 2026. A disruption lasting five to six months would push annual global LNG supply into year-on-year decline—the first such decline in the modern LNG era.

For agricultural drone operators, however, this is an opportunity: ag drones’ ability to deliver highly targeted, as-needed fertilizer application far more efficiently than terrestrial methods can offer meaningful savings and ensure that as little product as possible is wasted.

Understanding the Natural Gas–Fertilizer–Crop Chain

To appreciate why a disruption in the Persian Gulf cascades so directly into American farm economics, it helps to understand the production chain. Natural gas (mostly methane) serves as both the energy source and the raw material for nitrogen fertilizer. In steam methane reforming, natural gas is combined with steam at high temperatures to produce hydrogen gas. That hydrogen is then reacted with atmospheric nitrogen via the Haber-Bosch process to yield ammonia (NH₃)—the foundational building block of virtually all synthetic nitrogen fertilizers.

Ammonia is then converted into a family of products. The most widely traded is urea, a granular solid that is approximately 46% nitrogen by weight, making it the most nitrogen-dense solid fertilizer available and keeping shipping costs low relative to the nutrition it delivers. Other ammonia-derived products include ammonium nitrate (popular in Europe), UAN solutions (liquid blends common in North America), DAP and MAP (which combine nitrogen and phosphorus), and anhydrous ammonia (injected directly into soil across the U.S. Midwest). When natural gas prices rise, the cost of all of these fertilizers climbs, because ammonia is the common ancestor.

Crops most exposed: Corn is the single largest consumer of nitrogen fertilizer in the world, typically requiring 150–200 pounds of nitrogen per acre. Wheat, rice, cotton, and canola are also heavy nitrogen feeders. These crops all lack the biological machinery to fix atmospheric nitrogen on their own—they depend entirely on what is in the soil or what farmers add.

Crops least affected: Legumes—including soybeans, lentils, chickpeas, and peanuts—form symbiotic relationships with Rhizobium bacteria that convert atmospheric nitrogen into a usable form. A well-inoculated soybean field may need zero supplemental nitrogen. This is precisely why soybeans become relatively more attractive when fertilizer prices spike. Root vegetables and tubers (such as potatoes and cassava) need some nitrogen but considerably less per acre than cereals, and established orchards and vineyards have moderate nitrogen needs with fertilizer as a smaller share of total production cost.

State of World Fertilizer Markets

Josh Linville, Fertilizer VP at trading firm StoneX, has provided several illuminating data points.

In the first half of December, American markets were trading urea at $350 per ton. By March 20, the price had reached $695 per ton—about $70 below current global futures. Critically, Linville notes, futures at $760 per ton mean that informed willing buyers expect $760 will be a good deal in the months ahead.

Urea supply from three of the top ten exporters—Qatar, Saudi Arabia, and Iran—is currently stuck behind the Strait of Hormuz. Those three nations alone export 13.5 million tons of urea per year, enough to service 81 million acres of corn. For perspective, the U.S. has roughly 93 million acres of corn projected for planting this year. The U.S. only imports about 5 million tons, but the 81-million-acre figure is a useful benchmark for the scale of the global shortfall.

Beyond the Middle East, global output is also reduced. European production was already down 25% this year because of high gas prices. China has restricted between 50–80% of its 2025 fertilizer export volumes, potentially removing up to 45 million tons from global availability. India, the world’s second-largest urea producer, sources approximately 44% of its LNG imports from Qatar and over 40% of its urea and phosphate fertilizer from the Middle East generally.

As Linville stated: “The damage is done. If you load a vessel in the Middle East right now it’s a 30-day sail time. Even at the best-case scenario, the first vessels are not going to arrive here until the very last parts of April. [You’re functionally] missing the spring season.”

While the situation is painful domestically, the U.S. produces about 75–80% of its own nitrogen. Countries like India, Brazil, and much of Sub-Saharan Africa are profoundly more exposed.

What Next?

Compounding the price pressure, Diesel Exhaust Fluid (DEF) is 32.5% urea and consumes 17–20 million tons of urea annually. Although the EPA rolled back some DEF requirements on paper last year, rising DEF costs will still significantly compound the urea shortage’s impact on rural America. Mr. Linville has publicly called for suspension of DEF regulations to redirect urea back to agriculture.

Urea prices are now approaching levels last seen during the 2022 Russia–Ukraine crisis ($1,000+ per ton at peak). However, a critical asymmetry distinguishes 2026 from 2022: in 2022, the Russian invasion caused grain prices to spike, partially offsetting rising input costs for farmers. The Persian Gulf is not a major grain export region—so when fertilizer costs surge without a compensating increase in crop prices, it produces a severe cost–price squeeze.

USDA projections for March 2026 suggest a historic acreage shift: corn plantings dropping by approximately 4.8 million acres and soybean plantings rising by approximately 3.8 million acres. The logic is straightforward: at $900+ per ton for anhydrous ammonia, the per-acre loss for corn is estimated at $213 versus $139 for soybeans, which, as legumes, fix their own nitrogen. AFBF and university extension services report that farmers are already making these decisions at the planter. If this corn-to-soy shift materializes at scale, the U.S. corn harvest in late 2026 will be significantly reduced, with downstream effects on livestock feed costs, ethanol production, and consumer food prices.

Downstream Effects on Food Prices

The effects of a fertilizer cost spike cascade through the food system in waves. The most immediate impact hits grain and oilseed prices—corn, wheat, and rice—because they are the most fertilizer-intensive crops at commodity scale. The second wave hits animal protein: corn and soybeans are the primary feed ingredients for poultry, pork, and cattle, so meat, egg, and dairy prices follow with a lag of several months. The third wave hits processed foods, since corn derivatives and wheat flour are embedded across packaged food products.

The distributional impact is uneven and regressive. Wealthier consumers absorb the increase with minor adjustments, while in lower-income countries—particularly in Sub-Saharan Africa and South Asia, where food can represent 40–60% of household spending—a fertilizer price spike can push millions toward food insecurity, as was seen during the 2008 food price crisis and again after Russia’s invasion of Ukraine in 2022.

What Does This Mean for the Ag-Drone Industry?

With fuel prices set to rise—especially diesel and DEF—this will be an expensive season to run conventional equipment. Ag drones, however, mostly run on generator-charged batteries, greatly reducing fuel demand per acre serviced. Combined with the ability of multispectral drones to create highly targeted application maps that spreader-drones can follow, agricultural drones have a real opportunity to help alleviate some of the burden on farms across America.