Fertilizer Price Gaps Fuel Strong Margins Amid Rising Costs

Fertilizer prices have continued to rise in September, reversing a trend from August where many raw materials retreated from their highs. The closure of the Strait of Hormuz led to higher fertilizer component prices like ammonia, phosphates, urea, and potash. However, once the initial shock wore off, price growth normalized, and these stocks declined.

Despite this, fertilizer companies that turn natural gas into nitrogen are benefiting from the spread between European and U.S. gas prices reaching historic levels. The main Dutch hub supplying Europe reported a spot price of approximately $27 per MMBtu on September 11, compared to the $2.80 per MMBtu spot price at Henry Hub in the United States.

CF Industries Holdings Inc. (NYSE: CF) is a global nitrogen producer operating in North America and Europe. Despite a significant increase in its own gas costs, the company's gross margins rose to 51.5% in Q2 2026, up from 39.9% a year ago.

CVR Partners LP (NYSE: UAN) offers a different way to play the fertilizer trade as it is structured as a variable-distribution Master Limited Partnership (MLP). The company is operating at 99% ammonia capacity and realizing $791 per ton of ammonia and $392 per ton of urea ammonia nitrate.

LSB Industries Inc. (NYSE: LXU) is the high-risk, high-reward fertilizer play with the best setup heading into winter. The company can enter the winter season at full production and take advantage of its low gas costs ($2.96 MMBtu in Q2, expected $3.20 in Q3).