WASHINGTON, D.C. (RFD NEWS) — Rising geopolitical tensions are again exposing how dependent agriculture is on global fertilizer supply — and what that means for input costs and competitiveness. Research from Purdue University’s Center for Commercial Agriculture, by economist Joana Colussi, highlights growing risks tied to disruptions in key trade routes, such as the Strait of Hormuz.
The Persian Gulf region supplies a significant share of global nitrogen and phosphate fertilizers, and shipping restrictions have driven fertilizer and energy prices higher. That pressure is showing up in grain-to-fertilizer ratios, which remain near multi-year highs, squeezing producers’ margins.
The United States produces roughly 60 percent of its fertilizer needs but still relies heavily on imports for key nutrients — especially potash, about 95 percent of which is imported. Dependence on phosphate and nitrogen imports has also increased in recent years, leaving the U.S. exposed to supply shocks.
Brazil faces even greater risk, importing nearly 90 percent of its fertilizer needs, including about 96 percent of potash and 95 percent of nitrogen. That higher exposure puts Brazilian producers at a sharper disadvantage when global disruptions hit.
Rising input costs continue to pressure farmers’ margins, with concerns about fuel and fertilizer influencing operational decisions and prompting many producers to seek support from Congress.
U.S. Rep. Dusty Johnson (R-SD) joined us on Monday’s Market Day Report to share his outlook on the challenges facing agriculture and potential policy solutions.
In his interview with RFD NEWS, Johnson discussed the concerns he is hearing from farmers in South Dakota, particularly around rising input costs and ongoing financial pressures.
Rep. Johnson also outlined details of the Fertilizer Transparency Act, a bill aimed at increasing transparency into fertilizer pricing, explained the legislation’s goals, the next steps for the bill, and the type of feedback he has received so far from producers and stakeholders.
He also spoke about additional ways Congress and the administration could support farmers beyond bridge payments, as producers continue to navigate higher costs.
Finally, Johnson weighed in on discussions about additional aid for farmers, including proposals for billions in support, and shared his perspective on using tariff revenue to strengthen domestic fertilizer supplies.
Energy, Fertilizer Markets in Limbo as Strait of Hormuz Tensions Persist
The war in Iran is leaving key farm inputs in limbo as ships carrying oil and fertilizer wait to cross the Strait of Hormuz. A ceasefire is set to expire soon, and talks are set to resume today in Pakistan. It could be some time before fuel prices begin to ease, leaving many growers with higher costs well beyond planting season. Petroleum analyst Patrick De Haan at GasBuddy warns that it all depends on what happens in the Strait of Hormuz.
“I think prices will remain elevated for the next couple of months, and it’s really going to be contingent on whether or not we do see those ships start traveling through the Strait,” De Haan told RFD News on Monday. “Keep in mind, not only is oil blocked by the Strait of Hormuz, but a lot of refined products, including jet fuel and diesel, are also being held back by the closure. A lot of those big refineries in areas of the Middle East use the Strait of Hormuz to get those products to the market. So as long as this saga between the U.S. and Iran continues, oil, gasoline, diesel, and jet fuel prices all will likely remain elevated.”
De Haan says he has gotten many questions lately about America’s energy independence and why a conflict thousands of miles away is affecting fuel prices at home—especially since the U.S. is a top oil producer. He says the global system is tightly connected.
“U.S. oil companies, much like U.S. farmers, can simply send and sell their product overseas if that’s where the market is,” De Haan said. “And right now, with the Strait of Hormuz being shut down, a lot of customers in areas like Asia and Europe are getting desperate for oil supplies, as well as products like gasoline, diesel, and jet fuel. And U.S. oil companies are selling to the highest bidder, and a lot of those products are being pressured by all of those shortcomings due to the Strait being shut down.”
De Haan says the back-and-forth has made it challenging to navigate energy marketsfor both consumers and analysts.
“It’s very hard because what we hear and what we see are maybe two different things, and sometimes what the U.S. is saying and Iran is saying don’t match up — whether it’s one or the other — and that’s where the market is trying to figure out exactly what kind of trail we’re going to go down,” De Haan explained. " There’s a lot of posturing to these negotiations as well. So when both sides are saying the same thing, that’s something to look at. It hasn’t happened often. And I have to say, last week when Iran said the Strait was open and the U.S. was, that’s why oil plummeted. But now we’ve obviously seen Iran change its mind. So, just kind of highlighting the sensitivity of both parties is saying the same thing. That’s a good sign. But even that can be very fraught with potential details and changes.”
While energy markets have largely traded on headlines rather than fundamentals, some commodities are beginning to break away from that trend. Analyst Brian Hoops says grain markets are starting to refocus.
“I thought it was interesting on Friday when we had crude oil sharply lower during the trading session, and a lot of the bullish grain traders were pointing at how corn and beans really didn’t move that much in reaction to it,” Hoops said. “Well, we were sharply higher at one point overnight, and we barely moved in reaction to the higher prices. It tells us—and we thought this for several weeks now—that corn and soybeans have kind of distanced themselves from every move that crude oil makes. We’re starting to focus more on some of the other fundamentals, other news to look at.”
Hoops says those markets are now watching exports, weather, and planting indicators, such as crop progress, more closely.
Meanwhile, fertilizer prices are rising sharply, and nutrient experts say farmers are likely to feel more pressure over time. Some producers may not have felt the full impact yet because inputs were locked in earlier.
“I hope that the farmers did not get impacted as much as you see on the market news right now, but they will be impacted,” explained Geraldo Mattioli. “You know, they always need to buy some more in season. Availability may not be there. But the fact that the price has risen by so much, so fast — it did push some farmers to take a look at alternatives.”
Mattioli encourages farmers to stay open to new tools that could help manage cost volatility and improve flexibility.
“Biologics are not new to the market, but I think the science has been improving quite a lot. So what a farmer may have seen five years ago is probably not the same as he would see today with the science that has evolved so far. So I think, you know, be open, definitely support anything that can be done to mitigate this volatility and have one more option for you when you have to decide what to do.”
He adds nitrogen prices are closely tied to global energy markets and major exporting regions that often face geopolitical instability, making costs volatile and difficult for farmers to plan around.
