American Rice Farmers Plant 17% Less Facing $700 Urea

Sunday, May 31, 2026 · 06:03 PM

USDA's May WASDE projects 2026/27 U.S. rice production at 175.2 million hundredweight, down more than 31 million cwt and 15 percent from the prior year. American farmers are planting 493,000 fewer acres of rice — a 17 percent year-over-year reduction in harvested area to 2.27 million acres. Rice futures rose to $12.95 per hundredweight, the highest since August 2025.

The market is pricing fertilizer affordability as a structural supply shock, not a planting-season hiccup. Urea rose from $450+ per ton on February 27 to over $700 per ton by mid-March — an increase of roughly 50% in under three weeks — after nitrogenous fertilizer costs had already risen 22% from February 2025 to February 2026. Farmers across Asia are reducing rice planting due to soaring fertilizer prices and higher fuel costs exacerbated by the ongoing conflict involving Iran.

USDA raised its forecast for the average farm price to $13.50 per hundredweight, accelerating from $12.10 in the 2025–26 season. That 11.6% price jump doesn't cover what growers are paying for inputs. Fertilizer accounts for 33% to 44% of corn operating costs and 34% to 45% of wheat operating costs, according to USDA ERS data, with Illinois corn farmers projected to spend approximately $229 per acre on fertilizer in 2026. Rice operations face similar mathematics.

With 45% of global sulfur supply trapped behind the Strait of Hormuz, phosphate producers around the world face a critical feedstock shortage. More than 30% of world nitrogen fertilizer exports pass through the now effectively closed Strait of Hormuz, and Iran is the world's number three urea exporter and number seven in ammonia exports. Around 70% of respondents in an American Farm Bureau Federation survey report being unable to afford all the fertilizer they need.

Consensus expects India's record 42 million tons of rice stocks to cap any rally. They're wrong. India's stockpile is a buffer for domestic consumption in a country that just surpassed China as the world's leading rice producer — it's not an export valve when Asian acreage is contracting in real time. The USDA projects US rice supplies for the 2026–27 season at 175.2 million hundredweight, down about 15% from the previous year, while the onset of El Niño is expected to bring hotter and drier conditions to the region in the second half of the year, with signs of strain already emerging across parts of Southeast Asia.

Fertilizer traders are blunt about what's coming. Melih Keyman, CEO of Keytrade, was direct: "I would suggest dropping the idea of last-minute buying. Waiting for the last minute and hoping for prices to come off significantly from current levels — under these market conditions, I would recommend against that".

• Asian supply risk: Soaring fertilizer prices and higher fuel costs are forcing farmers across Asia to reduce rice planting, tightening the global supply-demand balance into 2027.
• Phosphate crisis deepening: Monoammonium phosphate (MAP) has climbed to $770 per MT in the U.S. and $990 in Europe as Saudi supply remains trapped behind the strait.
• July rice contract positioning: Watch the ZRN26 July contract—currently trading near 9-month highs with acreage cuts locked in and El Niño risks mounting through summer.