Strait of Hormuz closure threatens energy markets and fertilizer supply
Rising tensions in the Middle East are beginning to impact global agricultural markets, particularly fuel and fertilizer prices that farmers rely on during the planting season.
A key concern is the Strait of Hormuz, a major shipping route that moves about 20 million barrels of crude oil and petroleum products each day. This represents roughly 20 percent of global oil demand. The disruption of this important waterway has pushed diesel futures to their highest level in two years.
Fertilizer trade is also affected because large volumes of global nitrogen fertilizer move through the same region. Market analysts estimate that nearly one quarter of the globally traded nitrogen supply passes through the Strait of Hormuz.
“We have had prices up about $70 a ton from Friday afternoon trade. It’s been significant. UAN and anhydrous prices have not reacted as violently, but phosphate values are not far behind,” said Josh Linville, vice president of fertilizer for StoneX.
“Phosphate, we’ve got that price up about $30 a ton from the last trade we saw. Again, I’m a little surprised it’s not up anymore. That’s, I guess, a thankful thing that’s not up more, but I think more increases are coming. Really, the only major fertilizer that hasn’t been impacted so far is potash. But you can even make a case for that given Israel and Jordan’s importance,” said Linville.
As a result, fertilizer prices have already begun to increase in the United States. At the port of New Orleans, urea fertilizer prices recently rose to between $520 and $550 per ton. This represents a noticeable increase from the previous week’s average price of around $475 per ton.
Market analysts report that urea prices have experienced the sharpest increases so far. Phosphate fertilizer prices have also moved higher, increasing by about $30 per ton. While nitrogen and phosphate prices are rising quickly, potash has not yet seen the same level of increase.
Supply availability could become another challenge for farmers. Shipping fertilizer from the Persian Gulf to the United States takes time. Loading a vessel can take about 30 days, and shipping to U.S. ports takes additional time. Moving the fertilizer inland to farm regions can take several more weeks.
This means fertilizer shipments starting today might not reach farmers until early May. For many growers, this timing may be too late for spring fertilizer applications.
If fertilizer supplies are delayed, some farmers could shift crop plans. In some regions, producers may move from corn production, which requires large nitrogen inputs, to soybeans that require less fertilizer.
Meanwhile, government officials are exploring measures to stabilize energy markets and ensure safer shipping routes throughout the region.
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