War-spiked urea prices may prompt increase in soybean acres
March 6, 2026
By Mary Hightower
University of Arkansas System Division of Agriculture
Fast Facts
- Cotton, rice, corn all urea hungry
- Soybean acres could reach or exceed 2017 acreage levels
- Corn markets awakening on ethanol potential
(1,059 words)
Download file photo of soybeans
(Editor's note: The lede has been updated for clarity.)
LITTLE ROCK — As war pinches shipping through the Strait of Hormuz and drives up the cost of urea, growers are pivoting to soybeans — a crop that's not hungry for the widely used nitrogen fertilizer.
Unlike other crops, soybeans can fix nitrogen themselves, so no urea is required. However, urea is needed to grow corn, cotton and rice.
“It’s a good idea to revisit the crop enterprise budgets to look at any change in the net revenue margins for crops that require nitrogen fertilizers,” said Hunter Biram, extension agricultural economist with the University of Arkansas System Division of Agriculture. “So maybe you grow more soybeans than you originally thought you’d plant.
“We could be looking at 2017 acreage levels — over 3.5 million acres of soybeans this year,” he said.
Looking at the enterprise budgets established in the fall, “soybeans appear to be the least bad when it comes to returns,” Biram said. “We are looking at about a negative $5 per acre return on soybeans under a standard crop share agreement — and that's best-case scenario.”
The Cooperative Extension Service develops enterprise budgets each year to help farmers calculate profit or loss for the upcoming growing season, allowing growers to run multiple scenarios.
Moving toward beans
Jeremy Ross, extension soybean agronomist for the Division of Agriculture, said a colleague joked that Arkansas might have 4 million acres of soybeans this year.
“I laughed, but we may be over 3.5 million acres. That would be a 900,000-acre increase compared to 2025,” Ross said on Friday. “And 2.6 million last year was the lowest since 1960.
“It’s a good thing we don’t need urea for soybean production,” he said. “We will take all the acres we can this year.”
Scott Stiles, extension agricultural economics program associate, said even with the move toward soybeans, “growers are being offered new crop bids above $11 all around the state and growers are already making some marketing decisions on '26 crop soybeans. The lower input cost and better margins are favoring soybeans this year.”
Fewer rice acres
Jarrod Hardke, extension rice agronomist for the Division of Agriculture, said he’s seeing more growers back away from rice.
“I continue to hear rice seed orders being returned,” he said. “The question for me is no longer ‘will we plant at least 1 million acres?’ but instead, ‘just how low will acres fall?’”
“Nitrogen fertilization is directly tied to rice yields,” he said. “Farmers know how much urea it takes to make their yields, so it's a matter of whether this increasing urea price pushes them out of more acres.
“Given the economic situation, I'm guessing fewer farmers than normal had booked their urea at this point in the year, meaning this price increase will affect more growers — and acres — than usual,” Hardke said. “With rice already penciling out to a negative return in all situations, the red will deepen.”
Sticking with corn
The situation with urea is “not going to help corn acres any,” said Jason Kelley, extension wheat and feed grains agronomist for the Division of Agriculture. “Those who may have been trying to decide what to plant, this will make those decisions easier and are more likely to move to beans.
“However, the corn price has come up a little,” Kelley said, adding that “overall, still many intend to stick with plans that included corn.”
Stiles said the awakening in the corn market “has a strong linkage with the energy market” — specifically ethanol made from corn, which is blended with gasoline into E-15.
“Corn industry groups have long been advocating for year-round, nationwide, E-15 usage,” Stiles said. “The spike in crude oil and fuel prices in general this week is probably the event that will make E-15 a reality. That will be a sizeable demand opportunity for corn.
“New crop corn futures are trading at the highest level we've seen since May 2024, pushing above $4.80 this week,” Stiles said.
Decreasing cotton acres
Zachary Treadway, extension cotton agronomist, said “we have already been expecting a large decrease in cotton acres, and this is just another blow to an already hurting commodity.
“We are just waiting to see how much cotton acreage will fall,” he said. “I have predicted that we will see more acres end up in beans, and I think that still stands.
Treadway said cotton growers seemed to have a fair amount of urea booked at the best price they can find but said, “this is where soil tests are extremely important because they allow producers to apply the needed amount and not waste money where nitrogen may not be needed, or where a reduced rate will suffice.”
Stiles said “the National Cotton Council released its grower survey last month and had Arkansas' cotton acres down 30 percent to 362,000 acres. That would be the lowest since the all-time low of 210,000 acres in 2015.
“Cotton prices have not bid for acres and remain stuck below 70 cents,” he said.
Urea and war
Urea production is reliant on liquified natural gas production. Iranian drone strikes prompted Qatar to halt production of liquified natural gas and closure of the Strait of Hormuz is preventing about 20 percent of the global LNG supply from reaching its destinations.
This isn’t the first time urea prices have spiked, Biram said.
“Back in 2021, right before Russia had the full-on invasion of Ukraine, Russia was limiting fertilizer exports, and that was causing prices to go up. Then there was the actual invasion in 2022, and fertilizer prices nearly doubled and remained elevated for almost a year.
"Strong demand and low liquified natural gas inventories kept prices elevated in late 2021. Any restrictions on natural gas production or exports will increase the price of natural gas, a key component in urea production, which will increase the price of urea fertilizer,” Biram said.
“However, the liquified natural gas market has been quiet.”
There were two other spikes in 2008 and 2012.
“The one in 2008 was largely attributed to the expansion of the Renewable Fuel Standard,” Biram said. The Renewable Fuel Standard increased ethanol demand, and therefore demand for corn, which is heavily reliant on nitrogen fertilizer.”
Four years later, widespread drought “sent corn prices higher, which also increased demand for nitrogen fertilizer.
“In both these instances, higher prices were sustained through the growing season between March and November,” Biram said. “I can’t think of worse timing.”
To learn about extension programs in Arkansas, contact your local Cooperative Extension Service agent or visit uaex.uada.edu. Follow us on Facebook and Instagram. To learn more about the Division of Agriculture, visit uada.edu. To learn more about ag and food research in Arkansas, visit the Arkansas Agricultural Experiment Station at aaes.uada.edu.
About the Division of Agriculture
The University of Arkansas System Division of Agriculture’s mission is to strengthen agriculture, communities, and families by connecting trusted research to the adoption of best practices. Through the Agricultural Experiment Station and the Cooperative Extension Service, the Division of Agriculture conducts research and extension work within the nation’s historic land-grant education system.
The Division of Agriculture is one of 20 entities within the University of Arkansas System. It has offices in all 75 counties in Arkansas and faculty on three campuses.
Pursuant to 7 CFR § 15.3, the University of Arkansas System Division of Agriculture offers all its Extension and Research programs and services (including employment) without regard to race, color, sex, national origin, religion, age, disability, marital or veteran status, genetic information, sexual preference, pregnancy or any other legally protected status, and is an equal opportunity institution.
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Media contact:
Nick Kordsmeier
Nkordsme@uada.edu