Nitrogen fertilizers are produced in the Gulf and exported, and natural gas and sulfur are exported to producers around the world. Prices of both nitrogen and phosphate fertilizers jumped at the beginning of the war, but nitrogen fertilizers dropped back to pre-war levels after a few weeks.
Phosphate prices jumped and are predicted to remain high for months due to a global shortage of sulfur, which is used to extract phosphate from the material it is naturally mixed with.
Pre-war prices were already seen as elevated and a financial challenge for farmers, so the war spike has exacerbated a tough situation, according to agricultural economists.
For the world's commercial corn, soybean and other crop farmers, fertilizer prices can be a key factor in profitability because they are often their biggest expense, so reopening the Gulf is vital for boosting world supplies and reducing prices, say fertilizer analysts.
Mosaic expects to see global crop yields fall due to low phosphate application rates, since crops short of optimal amounts of fertilizer often can't reach their full potential.
Southern Hemisphere farmers will begin planting their main crops within weeks and most need to buy fertilizer, while Northern Hemisphere farmers will face the decision of whether to put fertilizer into the soil in the fall or wait for spring and hope for lower prices.
Nutrien said it expects potash demand to remain strong, since it is seen as the most affordable fertilizer. Some nitrogen demand lost in the second quarter should be recovered in the rest of 2026, Seitz said in the analyst call.
The company plans to spend less on capital projects in the rest of 2026 as part of the financial restraint it hopes will make this tight period a short-term phenomenon.
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