26.03.2026, 00:47
Global fertilizer shortage may push grain prices higher
Supply disruptions through the Strait of Hormuz and rising nitrogen prices increase risks for global yields and cropping patterns
Disruptions in the supply of nitrogen fertilizers through the Strait of Hormuz could reduce global grain yields and alter cropping patterns, ultimately putting upward pressure on prices. These conclusions are presented in a Goldman Sachs report published on March 24, Reuters reports.
According to analysts, a shortage of fertilizers may reduce harvest volumes due to delayed or suboptimal nitrogen application, and may also encourage farmers to switch to less input-intensive crops such as soybeans.
The report notes that in the United States, where up to 50% of urea is imported in some years, the spring planting season may face challenges, as current fertilizer inventories remain about 25% below typical levels.
According to Goldman Sachs, global prices for nitrogen fertilizers, which account for about 20% of grain production costs, have risen by 40% since the start of the Middle East conflict. About a quarter of global nitrogen trade and roughly 20% of liquefied natural gas supplies, a key input for nitrogen production, pass through the Strait of Hormuz, which has effectively been blocked since the conflict in Iran began.
The bank warns that supply disruptions could limit fertilizer availability and increase production costs in other countries as well. Spare production capacity outside the Middle East remains limited. Additional pressure comes from production constraints in Russia, which accounts for about 15% of global nitrogen fertilizer exports, as well as the likely continuation of China’s export restrictions after August this year.
At the same time, the report notes that U.S. farmers are adequately supplied with fertilizers thanks to active purchases ahead of the planting season. However, delays in March shipments may affect availability in April, compounded by the lack of strategic reserves and limited ability to quickly scale up domestic production.
Analysts also point out that fertilizer supply disruptions in Europe, Australia, and countries in the Southern Hemisphere could increase demand for U.S. grain exports and contribute to higher prices.
