Fertilizer prices surge as Strait of Hormuz disruptions tighten supplies

The World Bank Group’s fertilizer price index rose more than 12 percent in 2026Q1 (q/q), marking its sixth increase in seven quarters. By April 2026, the index had reached its highest level since October 2022, driven mainly by export disruptions related to the closure of the Strait of Hormuz. Urea prices recorded the largest gains, while increases in other fertilizers were more moderate. Despite the recent surge, price increases remain well below the spikes seen in 2021 and 2022, when fertilizer prices jumped by more than 100 percent and 55 percent, respectively, amid supply disruptions in Russia and Belarus—two of the world’s key fertilizer suppliers. The more subdued response this time reflects three factors: (i) growers in the Northern Hemisphere had already secured much of their fertilizer supply; (ii) natural gas prices (the main production cost for nitrogen-based fertilizers) rose less sharply than after Russia’s invasion of Ukraine; and (iii) trade flows from the Middle East are increasingly being rerouted through land corridors, bypassing the Strait of Hormuz. The fertilizer price index is projected to rise by more than 30 percent in 2026, supported by higher input costs—particularly for nitrogen- and phosphate-based fertilizers—and resilient global demand. Prices are expected to ease in 2027 as exports recover and new supply comes online. However, risks remain tilted to the upside if elevated energy prices persist and shipping and production disruptions linked to the Strait of Hormuz continue beyond 2026Q3.

Nitrogen (urea) prices climbed above $850 per metric ton in April, up 80 percent since February and the highest level since April 2022. The surge was driven by major export disruptions following the closure of the Strait of Hormuz, a key shipping route for fertilizer exports from the Middle East, which accounts for nearly one-quarter of global urea exports. Supply pressures have intensified due to production outages across the region. The Islamic Republic of Iran halted ammonia production amid the conflict, while Qatar suspended production of urea, ammonia, and sulfur after damage to key facilities. India has also reduced urea and ammonia output because of lower LNG supplies. Tighter supply and potential export curbs from China have added to market concerns, pushing fertilizer affordability for farmers to its weakest level since mid-2022.

Urea prices are projected to rise nearly 60 percent in 2026 before easing in 2027 as Middle East exports recover and natural gas prices moderate. However, risks remain tilted upward, including prolonged shipping disruptions from the Middle East, further trade restrictions, and higher input costs—especially natural gas prices—all of which could push urea prices above their 2022 average.

DAP (diammonium phosphate) prices rose more than 10 percent in April after remaining relatively stable earlier in the year. The increase reflects tightening supply conditions and rising input costs, particularly sulfur prices, which have doubled since January. China’s move to tighten exports has also added upward pressure on prices. As a result, the DAP-to-food price ratio—which had declined for six straight months through February—rebounded in March and April.

DAP prices are projected to rise nearly 6 percent in 2026 before falling about 10 percent in 2027 as new production capacity comes online. However, major risks remain. Renewed export restrictions by China or a prolonged closure of the Strait of Hormuz could significantly disrupt global fertilizer trade, especially since the route handles a large share of global sulfur and ammonia shipments—both critical inputs for DAP production. Supply concerns have also intensified after Morocco’s OCP accelerated maintenance at its phosphate facilities, likely in response to disruptions in sulfur and ammonia markets.

MOP (muriate of potash) prices rose more than 5 percent in 2026Q1 and were nearly 17 percent higher than a year earlier. Despite the increase, affordability relative to food prices has remained close to pre-2020 levels. The market is becoming increasingly well supplied, supported by higher exports from Belarus following the easing of U.S. sanctions, as well as stronger shipments from Russia, Canada, and  the Lao People’s Democratic Republic. Supply conditions are expected to remain comfortable through 2026 and 2027.

MOP prices are forecast to rise about 12 percent in 2026 before easing 6 percent in 2027. The broader outlook remains balanced, as potash markets are less exposed to Middle East disruptions than other fertilizers. Still, sharper-than-expected increases in urea or phosphate prices could prompt farmers to cut MOP use to manage costs, weakening demand and exerting downward pressure on prices. In the longer term, major new production capacity—especially in Canada, the world’s largest potash producer and exporter—could add further downward pressure.

Source : World Bank