Fertilizer shock escalates as new supply risks emerge

THE war in the Middle East has created major disruptions to global supplies of nitrogen-based crop nutrients.

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Now a potentially bigger threat is emerging in another important part of the fertilizer market.The focus since the conflict began has been on urea, a key nitrogen fertilizer used on corn. Prices for the nutrient have surged as the war blocks shipments through the Strait of Hormuz, sending farmers scrambling to procure supplies. What's been largely overlooked in the chaos is the risk to phosphate fertilizers key for crops like soybeans, a cornerstone of food production.

The Middle East accounts for only about a fifth of global trade for three key phosphate products, according to The Fertilizer Institute. But almost half of the world’s supply of sulfur which is turned into sulfuric acid for the processing of phosphate fertilizer comes from countries in the Middle East vulnerable to disruptions in the Strait of Hormuz.

The effects along the supply chain could start to be “exponential” if the conflict continues for much longer, once producers work through existing sulfur and sulfuric acid reserves, said Andy Hemphill, who covers sulfuric acid markets for commodity pricing platform ICIS.

That's bad news for the global food supply, which counts on phosphate to support the growth of everything from soybeans to potatoes. The conflict is already raising concerns over inflation and food security. It’s also the latest threat to US farmers, who were already weathering years of high production costs. Nearly 80 percent of the US’s phosphorus is applied to its soy and corn fields, which in turn are processed both into livestock feed and fuel.