The fertilizer supply chain is anticipated to remain in a state of volatility throughout the year. Phosphate prices are expected to remain elevated until 2027, as growers worldwide grapple with their application strategies heading into critical growing seasons. This insight comes from Rabobank’s Semiannual Fertilizer Outlook.

Recent geopolitical tensions, particularly the ongoing conflict between the U.S. and Israel with Iran, have rapidly escalated fertilizer prices. The nitrogen and phosphate markets have been hit hard, whereas potash prices have remained relatively stable. Rabobank estimates that the closure of the Strait of Hormuz could remove approximately 0.8 million metric tons of fertilizers and their precursors from the monthly market supply.

Currently, the affordability of all three main fertilizers has reached its lowest point in 18 years. Over the next six months, nitrogen and phosphate are expected to see upward price pressures, while potash may also experience slight increases. Rabobank predicts a potential improvement for potash in the latter half of 2026.

Countervailing Duties and Domestic Market Implications

In the United States, discussions are intensifying regarding the reduction or elimination of countervailing duties (CVDs) to help alleviate pricing pressures. Samuel Taylor, a senior analyst at Rabobank, noted, “It’s unlikely that this will significantly affect domestic pricing.” Historically, CVDs have caused U.S. phosphate prices to exceed global prices, creating an export arbitrage opportunity, particularly to Brazil, where U.S. phosphates can still be profitably exported.

Global Impact of Fertilizer Price Fluctuations

The ripple effects of the fertilizer market disruption are being felt globally. While U.S. farmers have been somewhat insulated from immediate price hikes due to early-year allocations, Brazilian farmers are not as fortunate. Brazil, which imports nearly 90% of its fertilizers, is expected to reduce its imports from 49.1 million metric tons last year to 47.2 million metric tons this year.

In Brazil, phosphate prices have skyrocketed, with CFR (cost and freight) exceeding $1,000 per ton, creating a daunting scenario for growers. Other nations are grappling with similar economic strains as higher fertilizer prices present various challenges:

• China: Self-sufficient in phosphate and nitrogen fertilizers, China faces less risk from Middle Eastern tensions. However, it imports most of its potash from countries not affected by the Strait of Hormuz.
• India, Pakistan, and Bangladesh: Heavily reliant on Middle Eastern fertilizer sources, they are experiencing some of the strongest disruptions, with India notably being a significant urea-deficient country.
• Australia: Dependent on imports for urea and MAP, Australia is seeing granular urea prices around $915 AUD per ton—a 57% year-to-date increase—impacting farmer margins significantly.

Efforts for Relief in Global Tariffs

Countries such as Mexico and Turkey are actively working to remove tariffs on fertilizers, with Europe potentially following suit. This comes as a response to high nitrogen fertilizer prices. “The U.S. was the first to reduce tariffs, even before the conflict escalated,” noted Doriana Milenkova, senior analyst for Europe and Africa.

As the fertilizer market continues to navigate through turbulent waters, stakeholders globally will need to adapt to fluctuating prices and supply chain challenges to ensure food security and agricultural resilience.