KUALA LUMPUR, March 25 (Xinhua) -- Rising fertilizer prices and a prolonged U.S.-Iran conflict could curb fertilizer use across Southeast Asia, increasing downside risks to grain production for the 2026/27 crop cycle, according to a Fitch's unit report.

BMI Country Risk and Industry Research said in a note on Tuesday that global urea prices have surged since tensions escalated on Feb. 28, with the U.S. Gulf New Orleans granular urea spot index climbing 40.4 percent to 660 U.S. dollars per tonne as of March 20.

The spike reflects expectations of tighter global supply, particularly as exports from Gulf Cooperation Council (GCC) countries -- which accounted for about 20 percent of global nitrogenous fertilizer exports in 2024 -- face constraints.

With key planting seasons approaching, sustained high prices for nitrogen-based fertilizers could prompt farmers to reduce application rates, weighing on yields.

"That said, we expect impacts to be uneven across markets, reflecting differing production structures, policy responses and exposure to imports," said BMI.

According to BMI, Indonesia, Malaysia and Vietnam are expected to be relatively insulated from nitrogen fertilizer shortages due to stronger domestic production and access to natural gas feedstock.

By contrast, it sees the Philippines as more exposed due to its heavy reliance on imports. ■