The warfare in Iran may increase international meals costs because the battle disrupts fertilizer shipments by one of many world’s most important commerce routes.
Whereas vitality markets have centered on oil provide dangers, analysts say threats to fertilizer provide chains by the Strait of Hormuz might also carry long-term financial points by meals inflation.
“Past vitality, one other threat receiving much less consideration is the potential knock-on impact on meals costs, as fertilizer shortages push agricultural prices larger,” mentioned Wolfe Analysis chief economist Stephanie Roth in a observe written on Tuesday.
Roth estimates the disruption may increase “food-at-home” inflation by roughly 2 proportion factors, including about 0.15 proportion factors to headline inflation within the U.S., on prime of roughly 0.40 proportion level enhance from vitality.
These potential value hikes come as U.S. customers face a sustained stretch of upper costs for meals, housing and vitality. Inflation for meals at house climbed 2.4% yr over yr in February, the Bureau of Labor Statistics mentioned Wednesday.
Prospects store at Walmart in Little Rock, Arkansas, Jan. 22, 2026.
Will Newton | Getty Photographs
Multiple-third of worldwide traded fertilizer passes by the Strait of Hormuz, making it a vital artery for agricultural provide chains. Industrial site visitors by the route has largely been halted for the reason that warfare began late final month, disrupting shipments simply as farmers throughout the Northern Hemisphere put together fields for spring planting.
The timing is vital as a result of fertilizers are utilized early within the crop cycle and assist decide yields later within the yr.
“If fertilizer provide tightens throughout this window, farmers could scale back utility charges,” Roth mentioned within the observe. That would scale back yields for crops like corn, soybeans, wheat and rice, and enhance agricultural prices.
Economists within the fertilizer trade are equally involved and say costs are already rising.
Between the weeks ending Feb. 27 and March 6 — which embody the beginning of the warfare — the worth per brief ton of urea fertilizer imports within the U.S. jumped by 30%, in keeping with knowledge collected by trade advocacy group The Fertilizer Institute.
Urea — a nitrogen-based fertilizer extensively used to spice up crop yields — is among the most closely traded fertilizers shifting by the area.
Larger fertilizer costs for farmers and retailers may in the end increase meals prices for customers if the commerce disruption lasts, mentioned Veronica Nigh, chief economist at The Fertilizer Institute.
“It is a international influence on fertilizer prices,” mentioned Nigh. “I might think about that there could be far more passing on of those prices to customers on this state of affairs, which isn’t one thing now we have seen earlier than.”
The U.S. depends on international fertilizer markets, importing roughly 20% of its whole use, although nitrogen fertilizers like urea come from a extra wide-ranging group of suppliers, together with Canada, Trinidad and Tobago, Russia and elsewhere.
The ripple impact may stretch all over the world and past commodities. Asia and Africa are particularly depending on fertilizer exports from the Gulf area. International locations reminiscent of India rely closely on Gulf provides, whereas a number of African economies rely on imported supplies used to provide fertilizers.
Whereas disruptions to fertilizer shipments may decrease crop yields for farmers and lift prices for households, fertilizer producers may stand to learn.
CF Industries hit an all-time excessive Monday and shares are up practically 10% over the previous week, the corporate’s largest multiday acquire since 2022.
Correction: This story has been revised to replicate that the Iran battle is disrupting fertilizer shipments by the Strait of Hormuz. A earlier model misspelled the identify of the physique of water between the Persian Gulf and the Gulf of Oman.
