Fertilizer Shortage Pushes Grain Prices to Three-Year High Amid Strait of Hormuz Disruptions

The global fertilizer market is facing a severe shortage due to disruptions in the Strait of Hormuz, which has led to a surge in fertilizer prices. The Strait of Hormuz is a critical transport route for urea, ammonia, phosphate fertilizers, and sulfur, with approximately 18.5 million tonnes of urea passing through it in 2024, accounting for 34% of global trade.

The conflict has caused hundreds of vessels to remain stranded in the Gulf region due to security risks, resulting in a near-halt of commercial shipping. Natural gas facilities have been partially shut down, fertilizer plants suspended production, and some installations have sustained damage. The fertilizer supply crunch has transmitted to agricultural input and energy prices, with international urea prices surging 55%, oil prices 50%, natural gas prices 25%, while freight and fuel costs have risen approximately 43% and 58%, respectively.

The impact of the fertilizer shortage will be felt in this year's autumn planting and next year's harvest. Fertilizer accounts for approximately 20% of grain production costs, and rising costs will directly squeeze planting profitability. Some farmers are reducing fertilizer applications or shifting to lower-intensity crops, while countries have begun implementing export restrictions or import subsidies.