Craig Mellow

The Iran War was supposed to cause a fertilizer crisis along with an oil and gas crisis. It didn't, so far, for the most part.

Prices for urea, the most essential fertilizer for farmers worldwide, returned to near prewar levels even before the U.S. and Iran announced their interim peace accord this week. Shares in top producers like Canada-based Nutrien and U.S.- based CF Industries Holdings, fell sharply from peaks in late March or early April.

"I was surprised that prices came down so quickly," says Joel Jackson, fertilizer and chemicals analyst at BMO Capital Markets. "Demand just stopped."

Natural gas accounts for as much as 80% of the cost of nitrogen-based fertilizers like urea, he explains. The Persian Gulf states process their cheap gas into 30% of global seaborne exports, adds Ben Isaacson, a managing director for equity research at Scotiabank.

The war's timing was in customers' favor, though. U.S. and European farmers had bought most of their spring inputs by the time bombs fell on Feb 28. Southern Hemisphere powerhouses like Brazil and Argentina don't plant intensively until September. China generally allows its urea producers to export starting in April, once domestic quotas are filled, Isaacson says.

India looks like the wild card in the global fertilizer picture, as its peak planting season comes with the June-July monsoon. It produces most of its urea domestically but depends on liquefied natural gas from war-affected Qatar. India's 100 million-plus farmers can trim demand a bit, though, says Willis Thomas, head of fertilizers analysis at commodities consultant CRU Group. "They generally have high application of urea, so a small dip is OK," he explains.

Phosphate fertilizer prices have jumped by a quarter since the war started. That's because you can't make them without sulfur, an oil derivative whose cost has increased fivefold as supply is locked behind the Strait of Hormuz.

The shock has wreaked havoc with Florida-based Mosaic, the dominant publicly listed phosphate producer. Its shares have sunk by 20% during the war as margins were squeezed.

But unlike nitrogen fertilizers, which have to be applied with every planting, phosphates foster longer-term soil health. So farmers can "skip a year," CRU's Thomas says.

Mosaic shares could rebound if the Hormuz peace holds and sulfur exports flow again, BMO's Jackson predicts. They have already bounced 10% since U.S. President Donald Trump unveiled the tentative accord on June 13. "Mosaic could end up with better earnings than people think," Jackson says.

For urea and its nitrogen-based cousin ammonia, the peacetime outlook is stable, CRU's Thomas thinks. Alternative producers should curtail supply to prevent a glut as the Gulf revs back up. "Urea prices have more or less reached a floor where risks are to the upside," he says.

More broadly, the world is lucky that war broke out after several bountiful harvests filled granaries, says Joseph Glauber, research fellow emeritus at the International Food Policy Research Institute. U.S. corn prices, after a wartime blip, are back near their lowest point since the 2020 pandemic year. "There's a lot of grain in the world," Glauber observes. "Stocks are high."

That won't necessarily translate to food prices, which depend at least as much on the cost of fuel from farm to supermarket. The price of diesel in the U.S. has climbed 30% since Feb. 28, according to the Federal Reserve.

The costs of war aren't fully paid yet.

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June 19, 2026 21:31 ET (01:31 GMT)

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