Eddie Tofpik
Head of Technical Analysis & Senior Markets Analyst 
ADM Investor Services International

For fertilisers this year, the key word is no longer oil… it is gas. From the Strait of Hormuz to Brazil’s planting window, tightening supply, higher input costs and fragile energy flows may shape not only fertiliser markets, but also the outlook for grain production and food prices in 2026 and beyond.

This all started with the Strait of Hormuz... but perhaps that is going too far back.

For me, this really started at the end of May, when I was attending and taking part in Commodity Trading Week Europe (CTW) in London. It developed further more recently when I spoke and took part in a panel session at the International Grains Forum (IGF) in Novi Sad, Serbia.

At CTW, a key theme for the event was established early on when Ben Hillary, the Managing Director of the host, Commodities People, asked the audience to type and send in one word that showed what commodities meant to each of us.

For the last few years - definitely for 2025 - that word had been... Oil! However, this year, a new word emerged... Gas. And I think it is a real and very strong concern, especially after the end of May.

It is estimated that approximately 800,000 MT of fertilisers and precursors are removed from the market each month the Strait of Hormuz is closed ⁽¹⁾. To give you an idea of the impact, News Nation’s Brooke Shafer in the U.S. summed it up well when he said: “It’s not just 20% of the world’s oil that travels through the Strait of Hormuz - it’s fertilizer, too. About one-third of the world’s fertilizer travels through the Strait, according to the United Nations. That includes nitrogen fertilizers, which require liquified gas, and phosphate fertilizers, made from urea, ammonia and sulphur. Fertilizers are paramount to producing wheat, fruit, corn, rice and more” ⁽²⁾.

Added to this, Bloomberg’s Julian Luk and James Attwood reported that China had indicated it would halt exports of sulphuric acid from May, hitting metals and fertiliser industries already strained by raw material bottlenecks resulting from the Iran war ⁽²⁾. Luk further added that the region produces one-third of the world’s sulphur, a raw material used to make sulphuric acid, which is essential for some copper extraction and phosphate fertilisers ⁽²⁾.

An example of the impact this has had on fertiliser prices - and on the willingness of buyers to pay up - was the tender India made via Indian Potash Ltd. in late April for a record 2,500,000 MT of urea in a single tender, at nearly double the price paid only two months earlier. The tender included 1.5 million MT at USD 935 per MT and 1.0 million MT at USD 959 per MT, compared with USD 508 and USD 512 per MT previously. Some offers in the tender were even around USD 1,000 per MT, with some as high as USD 1,136 per MT ⁽³⁾.

This is the background to the situation... but there are other things to consider.

FERTILISERS OUTPACE AGRICULTURAL PRICES

In a comparison made by the Agricultural Risk Policy Center of North Dakota State University in late March ⁽³⁾, looking at the effects of both the start and early peak of the Russo-Ukrainian war compared with the pre-closure to post-closure period of the Strait, the following details were highlighted.

Back in 2022, Wheat (HRW) rose 73.8%, Corn 34.4%, Soybeans 26.5% and Soybean Oil 49.8%. In mid-March this year, the same markets rose 5.9%, 3.6%, -0.1% and 7.5%, respectively.

Fertiliser prices in 2022 rose by 40.8% for Urea, 39.5% for DAP, 33.7% for MAP and 19.4% for Potash. In mid-March this year, they rose by 28.2%, 2.6%, 1.5% and 0.8%, respectively.

From this, we can see that agricultural prices have increased... but not as fast as some fertiliser prices, especially the rise in Urea. Some other fertilisers, especially Potash, have been somewhat shielded from this. This is not a uniform example, as it only deals with U.S. destinations, but it does give an idea of some of the issues.

Now, for most of the Northern Hemisphere, this will likely be a ‘wait-and-see’ situation, as the use of fertilisers is now effectively over and most will be watching for the 2027 season.

WHEN TIMING MATTERS MORE THAN SPOT PRICES

However, Brazil is now entering its winter season and will soon be looking at fertiliser prices with some - possibly great - concern. The immediate decision window for Brazil is finishing for soybeans and will soon be starting for corn, between July and November 2026 ⁽⁴⁾.

Additionally, Brazil imports between 90% and 99% of its fertilisers, mainly from Russia and China ⁽⁵⁾. Thus, it may not necessarily be the ‘spot’ price that is the key for all purchases... but the purchasing window.

This leads to another point - and a significant one!

The damage done to LPG facilities and also to fertiliser plants across the Gulf during the Iran war remains an important concern. It is somewhat unclear how bad the damage during the conflict has been so far, and the countries involved have been reticent in fully disclosing details.

I suspect the damage may be a lot greater than some optimistic reports suggest, and the turnaround to full production may take a lot longer than many envisage. I could be wrong... but I just think this is how these sorts of situations play out, so please be prepared.

At the same time, new operations outside the Gulf, utilising other feedstocks and energy sources, are emerging. This includes, for example, a farmer using spark technology powered by solar panels on his farm to produce nitrogen from the air. Another case is New Zealand, where a USD 1.77 billion project will be set up to produce urea from brown coal, or lignite, enough to provide all the urea New Zealand needs locally ⁽⁶⁾.

NATURAL GAS IS THE KEY

This brings me back to my original concerns prompted by CTW and IGF. Natural Gas is the key! The availability of gas - or the lack of suitable availability - has an immediate and lasting effect on fertiliser prices, particularly at the start of the Southern Hemisphere growing season. There will likely be knock-on effects in the form of potentially lower yields and possibly still higher prices.

However, many in the Northern Hemisphere, as I said earlier, will likely wait it out to see if prices can return to lower levels within their own purchasing window, maybe as late as the turn of 2026 into 2027.

This is a risky strategy, with the possibility of prices chasing potentially limited supplies of fertiliser, all at the same time. But then... what choice do many users have?

As Rabobank’s semi-annual fertiliser outlook stated: “Overall, the fertilizer market faces a prolonged period of tight supply, weak affordability, and heightened price risk. Even if geopolitical tensions ease, normalization will be slow. The outlook for 2026 points to continued pressure on farm economics and increased downside risks for global crop production and food price stability” ⁽⁷⁾.

I suspect this may well be an understatement.

References

(1) AgTechNavigator - 14 April 2026

(2) Farm Policy News - 13 April 2026

(3) Reuters News - 22 April 2026

(4) Farmdoc Daily - 23 March 2026

(5) Farmdoc Daily - 10 April 2026

(6) World Fertilizer - 30 April 2026

(7) RaboResearch Food & Agribusiness - April 2026