The timing of the US-Israeli attack on Iran “literally could not be worse” for the fertilizer industry, StoneX Group brokerage VP Josh Linville told Bloomberg, alluding to the imminent start of the Northern Hemisphere’s growing season, and problems shortages of the key farming ingredient could cause.
Here’s what’s at stake if US-Israeli aggression continues:
1/3+ of the world’s Sulphur and ammonia-based fertilizers pass through the Strait of Hormuz, now blocked amid the Iran strikes’ escalation into a regional war
~5% more pass through the Red Sea, including Russian, Belarusian and European fertilizers heading to Asia, and Jordanian, Egyptian and Israeli potash, nitrogen and phosphates shipped to world markets
Iran, a global top ten producer of urea – a high-nutrient fertilizer variety, and major exporter of anhydrous ammonia (4.5M and 800k tons, respectively) has been forced to halt its own exports.
Egypt and Jordan, which depend on imported energy to produce their fertilizers, face skyrocketing prices
If Hormuz and Bab el-Mandeb are out of bounds, what remains of exports will need to be shipped around the Cape of Good Hope, arriving weeks later, while costs surge thanks to hiked shipping costs and market speculation (urea prices have already skyrocketed from $470-$531 in four days, per Trading Economics)
What does less fertilizers mean?
Lower yields of key staple crops (corn, wheat, rice, etc.), carbohydrates critical to diets in many developing countries, and used heavily to feed animals (livestock, farmed fish)
Higher food prices
High logistical costs and the complex chemical nature of different fertilizer varieties makes the commodity a just-in-time (JIT) piece of farming supply chains. ‘Strategic fertilizer reserves’ are rare and expensive
Who’s the most vulnerable?
India, which imports urea heavily from Gulf nations, and relies on Qatari LNG for domestic plants
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