I guess I'd put this in the 'unintended consequences' file.
The conflict in Iran has reduced the amount of fertilizer available and increased the cost.
As one might expect, this will increase prices and possible reduce supply of food in the US.
Farmers in the U.S. and Canada, already worried about another year of low profits or losses, now could have spring planting disrupted as they struggle to find fertilizer.
Prices for any available supplies have spiked more than a third since the war in Iran paralyzed global trade.
The U.S., which in some years imports half of its urea fertilizer, is about 25% short of the usual supplies that farmers buy for spring planting, according to The Fertilizer Institute, which represents the U.S. fertilizer supply chain.
Supplies could grow still scarcer if fertilizer destined for the U.S. gets rerouted to other places willing to pay more for it, an analyst said.
Josh Linville, a fertilizer market analyst at StoneX, said the price offered in New Orleans, the port area where most offshore U.S. imports enter and prices are set, is as much as $119 less per metric ton than global prices.
"Not only am I worried about incoming vessels being turned around to other, better-paying destinations, there's an argument to be made, if somebody was willing to go and buy up (supply on) barges, to load them onto a vessel and export it," Linville said.
Farmers who do significant springtime fertilizer application and have not already purchased their supplies are finding retail centers empty, or stocked with supplies sold at such a premium that it's unaffordable.
"It sends shivers down your spine," said Saskatchewan, Canada farmer David Altrogge, whose broker told him that a local fertilizer dealer had stopped offering prices for fertilizer due to the shortage.
He bought his urea in December, but if he bought it today it would cost C$44,000 ($32,070) more. Some farmers in his area now face that price hike or may not even be able to buy any, he said.
The Iran war has cut off critical nitrogen fertilizer supplies from the Gulf to the world's farmers. More than 30% of world nitrogen fertilizer exports, as well as fertilizer components like sulfur, pass through the now effectively closed Strait of Hormuz.
Unlike China, most countries do not hold strategic reserves of fertilizer, and much of the U.S. fertilizer dealer system does not hold stocks, leaving it vulnerable to sudden supply shortages.
"It's not like there's a whole lot of fertilizer sitting on the shelf," said Veronica Nigh, an economist at The Fertilizer Institute. "It's very much a just-in-time business model."
The length of time that the Strait of Hormuz is closed is critical. Fertilizer loaded onto ships in the Gulf can take weeks to reach markets like the U.S., and then must be transferred to river barges, trucks or trains to reach farmland. Most fertilizer needs to be applied before the crop starts growing, so any supplies arriving too late cannot be used for the 2026 crop.
Earlier this week, the American Farm Bureau Federation warned that fertilizer supply shortages could hit the U.S. food supply.
On Thursday, Senator Josh Hawley asked Attorney General Pam Bondi to investigate whether fertilizer companies were involved in price-gouging. Hawley noted that prices have soared as much as 32% since the start of the war and said this was not reasonable. Nigh of The Fertilizer Institute said fertilizer prices have been rising sharply around the world, a dynamic that is expected when supplies suddenly become scarce.
He also sent a letter to the largest fertilizer companies demanding they explain the price hikes.
shunwaste.com
