Farmers within the Northern Hemisphere are heading into the essential spring months, throughout which main fieldwork should start. Their friends within the south, in the meantime, are busy harvesting crops earlier than the winter units in.
Nevertheless, their work now takes place because the Iran battle creates critical provide constraints for important fertilizer merchandise — fueling huge worth spikes and warnings of looming meals insecurity.
Round one-third of the worldwide seaborne fertilizer commerce passes by means of the Strait of Hormuz, in accordance with the United Nations.
The waterway, a important delivery route that runs alongside Iran’s southern border, has been severely disrupted for the reason that begin of the battle, with visitors successfully coming to a halt and several other ships being hit by projectiles in or close to the waterway.
Staff unload urea fertilizer from a cargo ship in Yantai Port, Shandong Province, China on March 13, 2026.
Cfoto | Future Publishing | Getty Photos
For the reason that U.S. and Israel launched strikes on Iran on Feb. 28, the worth of fertilizer — a lot of which is produced within the Center East — has skyrocketed.
Fertilizer futures contracts are much less liquid than different commodities, making costs extra opaque. However analysts working within the sector informed CNBC that that they had seen the price of FOB granular urea in Egypt — a bellwether of nitrogen fertilizers — bounce to round $700 per metric ton, up from $400 to $490 earlier than the battle started.
In a Monday observe, Oxford Economics’ Alpine Macro stated urea and ammonia costs had surged by round 50% and 20%, respectively, for the reason that battle started. Different fertilizers, like potash and sulfur, have additionally risen in worth.
The Center East is a very giant exporter of urea and nitrogen merchandise, in accordance with Chris Lawson, vp of market intelligence and costs at CRU.
“With the Strait of Hormuz primarily minimize off, there is a massive chunk of world commerce that is not in a position to transfer proper now,” Lawson stated. “We estimate round 30% of exportable suppliers will not be actually out there to the market proper now, that’s Saudi Arabia, Qatar and Bahrain, however that additionally consists of Iran.”
Iran, Lawson stated, is a vital producer of nitrogen-based fertilizers and one of many largest exporters globally.
“There’s quite a lot of traded provide that’s in danger — 30% of world urea commerce comes out of Iran and the Hormuz-constrained nations,” he informed CNBC.
“It is a lengthy provide chain — if farmers aren’t in a position to get the urea that they want, crop yields will inevitably go decrease. Nitrogen is the primary nutrient {that a} crop must develop, [and] there might be inventories that may be drawn down, so that you’re not likely going to see an influence on crop yields and a lack of crop manufacturing till later within the yr.”
‘You may’t skip a season of nitrogen’
Dawid Heyl, a co-portfolio supervisor for the worldwide pure assets technique at Ninety One, informed CNBC that nitrogen fertilizers like urea had been on the forefront of the Center East disaster as a result of — not like different fertilizer teams like potash and phosphates — nitrogen is “the one factor that you might want to get to the plant each single yr.”
“You may skip a season of potash, you’ll be able to skip a season of phosphates, however you’ll be able to’t skip a season of nitrogen,” Heyl stated.
With farmers within the Northern Hemisphere as a result of start fertilizing their fields, the provision constraint has intersected with cyclical demand. Urea, one of many world’s most used fertilizers, is used within the progress of assorted crops, together with maize, wheat, rapeseed, and a few fruit and veggies.
A employee operates a tractor to plant and fertilize corn at a farm in Wapato, Washington, U.S., on Could 2, 2025.
Emree Weaver | Bloomberg | Getty Photos
“There is a direct correlation to your nitrogen utility and your agricultural yield in the long run,” Heyl stated. “That is why I am much more involved concerning the present disaster than I used to be when Russia-Ukraine occurred 4 years in the past.”
When Moscow launched its full-scale invasion of Ukraine in early 2022, the 2 nations had been main exporters of fertilizers, with Russia accounting for a big proportion of world potash manufacturing. Sanctions on Russian exports added stress to a market that was already experiencing shortages, pushing costs greater.
I am much more involved concerning the present disaster than I used to be when Russia-Ukraine occurred 4 years in the past.
Dawid Heyl
Co-portfolio supervisor, International Pure Sources technique at Ninety One
“This, to me, is beginning to really feel prefer it may very well be worse, as a result of it might actually have an effect on agricultural yields throughout quite a lot of geographies, and throughout the most important crops akin to maize [and] different massive ones,” Heyl added, noting that almost all fertilizer futures had seen double-digit worth progress within the weeks for the reason that battle started.
Sarah Marlow, world head of fertilizer pricing at Argus, agreed that the unfolding disaster within the Center East would have a much bigger influence on the fertilizer commerce than the Russia-Ukraine battle.
“Nearly 50% of all globally traded sulfur comes from that area. For urea, it is round a 3rd of all globally traded urea that comes from that area and for ammonia, it is near 25%,” Marlow informed CNBC on a video name.
“So, it is large. It’s extremely vital — and extra vital in some methods than the influence of Ukraine as a result of it’s affecting a number of producers.”
“You are not simply speaking about one or two,” she added, noting that exports from Saudi Arabia, Kuwait, Qatar, Iran and the United Arab Emirates had been all being affected.
“The sulfur market was already structurally tight earlier than this started and we would already seen a peak in worth in January,” Marlow stated. “We have now seen extra manufacturing go offline and exports unable to get out and to go away the area, so there’s much more of a scarcity and we might see additional worth spikes in consequence.”
Fertilizer manufacturing can also be taking a success as a result of a scarcity of storage choices for merchandise that can not be shipped and a shutdown of some vitality amenities within the Center East.
Earlier this month, QatarEnergy introduced it might cease downstream manufacturing of urea following its determination to deliver liquefied pure fuel manufacturing to a halt.
In the meantime, China — one other giant exporter of fertilizers — has put restrictions on exports to guard its home market from shortages, information company Reuters reported final week.
Meals safety fears
Ninety One’s Heyl stated that markets had entered 2026 with pretty excessive shares of fundamental meals commodities that had been reliant on fertilizer deliveries, that means there have been “buffer shares” which may assist offset some shortages of corn, wheat, soybeans and rice.
“If agricultural yields had been [hypothetically] impacted by 5% this yr, I do not assume we’ll be hunger, however it might definitely trigger meals inflation,” he informed CNBC, noting that rising market nations had been extra prone to really feel the brunt of the influence.
“Sadly, the poorer nations on the earth are very often extra uncovered to those crises,” Heyl stated. “I feel among the African nations that import quite a lot of grains, as an illustration, are going to be impacted.”
India, which imports nitrogen fertilizers in addition to pure fuel to supply them domestically, additionally faces excessive publicity to the shortages, Heyl added.
“I am extra involved for [a country] like India, for areas like East Africa, that are going to be extra weak,” he stated. “Rising markets east of Suez and the worldwide south are very often the form of final to have the ability to afford [inflated prices].”
However he famous that the U.S. was not fully insulated from the implications of a fertilizer worth shock, noting that whereas America produces quite a lot of its personal nitrogen fertilizer, the nation “has not received self-sufficiency.”
In response to the U.S. Fertilizer Institute, round a 3rd of nitrogen, phosphate and potash fertilizers utilized in the USA are imported.
“It is going to be inflationary for the farmer,” Heyl stated of rising fertilizer costs trickling by means of to the USA. “Are there going to make certain areas that may’t get their hand on the fertilizer or must ration?”
A complete of 54 agricultural teams lately wrote to U.S. President Donald Trump to name for “much-needed market aid for America’s farmers” amid surging gasoline and fertilizer costs.
“As planting season started in earnest throughout a lot of the U.S., the closure of the Strait of Hormuz despatched gasoline and fertilizer costs skyrocketing,” they stated. “Maritime freight disruptions from the continuing battle in Iran pose vital penalties to meals safety right here at residence and around the globe.”
