The associate director of the Ag Risk Policy Center at North Dakota State University says even if the Strait of Hormuz reopens today, U.S. agriculture will likely be dealing higher fertilizer prices for several seasons.
Shawn Arita says getting things back to normal will take time, given the waterway must be secure and cleared, hundreds of vessels are backed up and some fertilizer production facilities have been damaged.
“Urea is hovering about $700 per metric ton. Even if over the next two weeks, if the straight reopens, it’s going to take some time for those boats to trickle out. Through the fall application period, we still see elevated prices of $500 to $600 for urea.”
He says fertilizer prices could remain elevated into 2027.
“Again, best case scenario, you still have these plants that are damaged, major plants, like Qatar Fertiliser Company, and it’s very unlikely for those to come back in 2027. We’ll still have elevated prices above the $500 level, still much above what we saw in 2025.”
Arita says he’s concerned fertilizer costs are rising without a similar increase in crop prices, putting additional pressure on already tight farm margins.
The Persian Gulf supplies a significant share of global fertilizer, including urea, ammonia, MAP and DAP and sulfur.
EDITOR’S TAKE:
Not the news we wanted to hear, but likely a reality. Part of the issue has to do with shipping fertilizer but more importantly is the damage to major production facilities. The latter will definitely require more time to correct. All of this comes at a time when crop farmers are facing difficult financial times due to very thin margins. What is the answer? The most obvious is ending the war in Iran and allowing ships to move freely through the Strait of Hormuz. Next, is rebuilding the fertilizer plants damaged during the conflict. Other options include expanding demand through either adding export markets or new product uses domestically. The final option, and the least desirable, is to let some farmland lie idle. There are some smaller farms that are already considering this option.
What can you do to help? First, as a CAD member, you have AgPack®. If the farmer is in a position to lease or purchase a new or qualified used truck or SUV, they can realize savings of up to nearly $50,000 through exclusive rebates and discounts, even fertilizer! And, always remember that your parts and service departments can offer farmer/rancher specials.
