Fertilizer prices face volatility amid Middle East supply disruptions

Fertilizer markets are experiencing divergent price trends driven by geopolitical instability and supply constraints. Urea prices rose 4.65% in a recent week to $428.00/T, a reversal driven by constrained shipping capacity in the Strait of Hormuz. While sulfur prices eased slightly, they remain up over 232% year-over-year, influenced by a Russian export ban on various sulfur types through late 2026.

Long-term outlooks suggest elevated prices may persist. A CoBank report indicates that while prices have retreated from historic highs following the onset of conflict in the Middle East, structural disruptions are likely to create sourcing issues into 2027. Unlike previous shocks, current volatility is attributed to damaged production capacity and raw material constraints. Approximately 31 ammonia plants in the Middle East have been impacted by conflict, and 49 plants across India, Pakistan, and Bangladesh have faced curtailments due to feedstock shortages. Additionally, at least 20 Russian plants have been damaged by drone attacks.

In response to sustained costs, many farmers have shifted toward precision nutrient management. While nitrogen application rates have remained relatively stable to protect crop productivity, phosphate and potassium application levels have been reduced by 10% to 15% in recent years.