Key facts
- Fertilizer prices are projected to remain above pre-Iran war levels through 2028.
- Geopolitical instability in the Middle East, constrained feedstock supplies, and tightening phosphate availability are key drivers.
- The Middle East is a critical supplier of sulfur and urea, with significant volumes passing through the Strait of Hormuz.
- Damage to production facilities in the Middle East, India, Pakistan, Bangladesh, and Russia exacerbates supply challenges.
- U.S. agricultural retailers face increased price exposure for diammonium phosphate (DAP) and monoammonium phosphate (MAP) due to imports from the Persian Gulf.
- Farmers have reduced phosphate and potassium applications by 10-15% in recent years, utilizing soil testing and precision technology.
Fertilizer prices are expected to remain elevated through 2028, continuing to pressure the U.S. agricultural sector, according to a report from CoBank's Knowledge Exchange. This sustained high cost is attributed to geopolitical instability in the Middle East, constrained feedstock supplies, and tightening phosphate availability. The Middle East is a significant global supplier of fertilizers and raw materials, with a substantial portion of trade passing through the Strait of Hormuz. Conflict in the region has led to plant shutdowns and damage, impacting production capacity. This has reshaped global trade flows, particularly affecting U.S. agricultural retailers who import diammonium phosphate (DAP) and monoammonium phosphate (MAP) from the Persian Gulf. Farmers have responded to years of elevated prices by adjusting their nutrient management strategies, relying more on soil testing and precision application technology, leading to reduced phosphate and potassium applications. Market recovery is contingent on stabilization in the Middle East, lower sulfur prices, and shifts in global demand patterns.