For most of history it was obvious that one should schedule conflict so as to avoid clashing with the agricultural cycle. Autumn, when the harvest was in, was the ideal moment for big battles. That was why major military maneuvers were generally held at that time of year. Even as late as 1914 the harvest timetable may have played some role in the war planning of combatants.
The current war is disastrous from the point of view of the modern agricultural cycle.
The gulf region handles about one third of the global trade in inorganic nutrients and in terms of the agricultural cycle this is the key moment for shipments to be steaming out from the Gulf towards the major agricultural zones of the world.
[...] “The politicians are saying this is a war that’s going to last for weeks, not days, and when you look around at the world within four weeks, we’re in the middle of [the Northern Hemisphere’s] spring season applications and if these ships don’t go through the Strait of Hormuz today, they’re not going to arrive in time. … You’re talking about either having to switch your planting to a crop that is much less intensive for nitrogen use,” he said, or see yields fall. In Australia, while much of the fertilizer needed for sowing has already been bought, farmers around this time start looking to buy urea for dressing cereal crops beginning in September, said Stephen Annells, chief executive of Fertilizer Australia, a group representing the industry.”
[...] To see who will really pay the price however, look not to the developed world or big emerging markets like India, but to the weakest links in the chain - the poor, agrarian, smallholder economies of Africa.(x)
/// The global fertilizer market focuses on three main macronutrients: phosphates, nitrogen, and potash. [...] Potash and phosphates are both mined from different kinds of natural deposits; nitrogen fertilizers, by contrast, are produced with natural gas. QatarLNG, a subsidiary of Qatar Energy, a state-run oil and gas company, said on Monday that it would halt production following drone strikes on some of its facilities.
That shutdown puts supplies of urea, a popular type of nitrogen fertilizer, particularly at risk. On Tuesday, Qatar Energy said that it would also stop production of downstream products, including urea. Qatar was the second-largest exporter of urea in 2024. (Iran was the third-largest; it’s also a key exporter of ammonia, another type of nitrogen fertilizer.) Prices on urea sold in the US out of New Orleans, a key commodity port, were up nearly 15 percent on Monday compared to prices last week, according to data provided by Josh Linville, the vice president of fertilizer at financial services company StoneX. The blockage of the Strait of Hormuz is also preventing other countries in the region from exporting nitrogen products.
“When we look at ammonia, we're looking at almost 30 percent of global production being either involved or at risk in this conflict,” says Veronica Nigh, a senior economist at the Fertilizer Institute, a US-based industry advocacy organization. “It gets worse when we think about urea. Urea is almost 50 percent.”
Other types of fertilizer are also at risk. Saudi Arabia, Nigh says, supplies about 40 percent of all US phosphate imports; taking them out of the equation for more than a few days could create “a really challenging situation” for the US. Other countries in the region, including Jordan, Egypt, and Israel, also play a big role in these markets.
March is traditionally the start of planning the spring planting season in the US, which starts in earnest in April. US fertilizer buyers would normally be placing orders now, Linville says, in order to have the barges arrive in the US by early April. “If we lose several weeks here, we are talking about limiting the number of tons that arrive in our most important month,” he says.
Nigh says that most fertilizer demand in the US—around three-quarters—goes to large row crops grown in the Midwest, like corn, soy, wheat, and cotton. These farms are large operations; most farmers, she says, have made decisions about what types of fertilizers their crops will need and would be unable to pivot despite changes in global supply. “It’s a very critical window right now,” she says.
When energy markets are tight, the US has some reserve supplies—the Strategic Petroleum Reserve, the largest emergency supply of oil in the world—that it can release to help meet demand. But there’s no similar buffer for fertilizer, Nigh says.
[...] If the war keeps going, both Nigh and Linville say that US farmers—especially those growing cash crops like corn and soybeans—will most likely see increased prices for fertilizers of all kinds. US farmers are already facing big losses after the trade war with China. (x)
/// “We shouldn’t underestimate what this potentially could mean for global food production,” said Svein Tore Holsether, chief executive of Europe’s largest fertiliser group Yara.
He added that the focus on oil and gas was “overshadowing” the impact on the fertiliser industry. “If you’re not getting [fertiliser] into the field of the farmers, yields could go down by up to 50 per cent in the first harvest,” he said.
If the disruption continues, consumers could see higher prices for bread within six to 10 weeks, eggs within a few months and pork and broiler chicken within six months, estimates Raj Patel, food system expert at the Lyndon B. Johnson School of Public Affairs.
[...] Analysts say the disruption could prove even more damaging than the food shock triggered by Russia’s invasion of Ukraine in 2022, when energy and fertiliser costs surged and global food prices hit record highs.
“When prices spiked in 2022 it was extraordinary, but the market was able to adjust because Russian exports continued,” said Chris Lawson, head of fertilisers at CRU, adding that the “big difference” this time was that a blocked Strait of Hormuz was a physical barrier.
The impact on food in 2022 was more immediate because Ukraine was a major wheat exporter, said Patel, but “this time around the impact will be far more widespread”. (x)
/// Fertilizer manufacturers in India are beginning to cut output after Qatari supplies of liquefied natural gas, a key feedstock, were suspended due to hostilities in the Middle East.
[...] Rising prices of other raw materials used to make fertilizer, such as ammonia and sulfur, are adding to fears of higher production costs.
Pakistan’s Sui Northern Gas Pipelines Ltd. has also informed customers it will be unable to supply regasified LNG to their fertilizer plants due to the Middle East conflict, according to a company notice seen by Bloomberg. The country receives most of its LNG from Qatar and the suspension takes effect from midnight Wednesday.
“We are very much optimistic that the war may end soon,” Suresh Kumar Chaudhari, director general of Fertiliser Association of India said in an interview on Tuesday. “If the war continues, it will be matter of concern for us,” he added, without elaborating.
If the cuts last, India could be forced to step up costly imports ahead of peak agricultural demand during the monsoon season that begins in June. The country is the world’s biggest grower and exporter of rice and No. 2 producer of sugar, wheat and cotton.
/// Asia-based traders of dry sulfur are rushing to substitute supplies stranded in the Middle East as an intensifying regional conflict threatens access to the chemical used in fertilizer and nickel processing.
[...] About half the global seaborne trade of sulfur — roughly 20 million tons a year — originates in the Gulf and must transit the Strait of Hormuz to reach world markets. Saudi Arabia, the United Arab Emirates, Qatar, Kuwait and Iran are among the main exporters.
Middle Eastern suppliers account for more than half of China’s sulfur imports, according to a note released Tuesday by consultancy SMM Information & Technology Co. With spring planting season approaching, sulfur demand remains firm as phosphate fertilizer plants run at high rates and step up restocking, the note said. (x)
/// Markets might not yet have fully priced in the possibility of a long war, according to Morningstar analyst Seth Goldstein, who estimates that nitrogen prices could roughly double and phosphate prices rise 50% from current levels.
"If the supply shock lasts more than a few weeks, I wouldn't be surprised to see prices go back to the highs of 2022, when the Russia-Ukraine conflict began," Goldstein said. (x)
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