Tension in the Middle East has raised concerns about the price and availability of fertilizers.
StoneX Economist Josh Linville explains the impact on the global market.
“We spend a lot of time talking about the Middle East, its importance to the nitrogen marketplace globally, and this flight between Israel and Iran had a very direct relationship to the urea market. So, looking at 2024 numbers, Israel was the third-largest exporter in the world for urea. Well, Iran, as a precautionary measure, had to shut down their gas fields, which means you shut down nitrogen production. On the flip side, Egypt was number four, and they had shut theirs down. A lot of people were like, ‘Well, they’re far away from fighting. Why does that matter?’ Well, Egypt relies on Israel for their gas, so they had to shut down their nitrogren production. So, when all this started to happen, and especially when Iran started talking about closing the Strait of Hormuz, prices went crazy. You know, we’re talking 20-40% rallies in these markets.”
The StoneX VP says that while things have calmed down, we are still not sure if prices will return to their previous lows.
That means farmers already planning for fall applications may have some tough choices to make.
“Well, unfortunately, I think there’s going to be a very, very hard decision to be made in regards to the fall phosphate and potash applications. When you look at the phosphate verus the corn pricing, of course, we look at the December 26 corn today, because any of the phosphate bought today to be pplied in the Fall-Spring is being used to raise next year’s crop and so we look at that relationship between the two of them, it’s the highest it’s ever been for this time of year. We have beaten the 2008 records that were set. If you look at potash, it’s on the higher side. Not nearly as bad in comparison, but it’s still high, and I think farmers are going to have to sit there and look at it and decide how important is this?”
All five major fertilizers are currently seeing elevated prices. DAP stands at $810 per ton, MAP is $846, potash is $481, 10-34-0 is $672 per ton, and UAN32 is at $500 per ton.
