Fertilizer Prices Stay Volatile as Strait of Hormuz, Russia Disrupt Supply

[Paul Yeager]

Today's MtoM podcast is brought to you in part by the Iowa Economic Development Authority, creating opportunity for business in Iowa by connecting companies, entrepreneurs and communities with the resources to thrive. Learn more at Business Iowa.

The fertilizer market: where are the chokepoints still today in late 2026? What would solve it if something happens today or tomorrow? Would the flow of fertilizer start to move across the world in a cheaper fashion? Or will it be a more expensive fashion that doesn't really know? We're not going to exactly talk about prices, but we're going to talk about the factors that are impacting the fertilizer market.

And surprise, it hasn't changed. It's focused on two big regions. There are some dark clouds, but there are a couple of bright spots. We're going to talk today with Veronica Nigh. She is the chief economist of The Fertilizer Institute. It is an organization that we've talked to before on Market to Market, on the TV show, which, by the way, this is the MtoM podcast, which is a production of that show based at Iowa PBS.

I'm Paul Yeager. Veronica and I are going to talk about supply chains. We're going to talk about market conditions. We're also going to talk about potash and phosphate, as well as nitrogen and sulfur, and all of those fun topics that have caused a lot of indigestion for those who need and use fertilizer, not just in the United States, but around the world.

That's the subject of today's podcast, which, by the way, we thank you and remind you that a new episode comes out each and every Tuesday, and we have a viewer question. If you subscribe to the Market Insider newsletter, you know when new items are coming. Sometimes I might leak out what a podcast coming up is going to be, and you can join the conversation by submitting a question.

Subscribe wherever you get your newsletters, which is, for us, pretty easy. Go to our website, Market to Market. Now let's get to Veronica. This one's easy to start. Veronica, M-I-Z.

[Veronica Nigh]

Z-O-U.

[Paul Yeager]

It doesn't go away, does it?

[Veronica Nigh]

It never will. I promise that. I spent four lovely years at Missouri and 18 years prior to that, so no, it won't go away.

[Paul Yeager]

Native of the state.

[Veronica Nigh]

Indeed.

[Paul Yeager]

Where did you grow up?

[Veronica Nigh]

Northwest corner of the state. A little bit north of Kansas City, over by St. Joe. My folks are still there. I get back several times a year, try to get my city kids to actually know what a goat is. They can know what corn and beans are, that typical, "Hey, my grandparents grew up on a — have a farm" sort of thing.

[Paul Yeager]

So then you did grow up on a farm.

[Veronica Nigh]

I did, yeah. My folks have meat goats, actually, and did for the whole nine yards.

[Paul Yeager]

And so your college path leads to your career, economist, ag econ at Mizzou. And was the thought ever, "I'm going to return to the farm"?

[Veronica Nigh]

You know, honestly, not really. So as you said, I went to Mizzou. About halfway through — well, all through, I had really great professors — but about halfway through, I got into the policy realm. I did an internship out here in D.C. with the U.S. Trade Representative Office. And my mom said — I came home and she said, "I knew that was it. I knew you were going back."

Because trade's really exciting. It's the nexus for where U.S. agriculture can really find additional markets, and we can keep U.S. agriculture growing. And I've been that nerd ever since, so it's really stuck.

[Paul Yeager]

Who was the trade rep when you interned, if you want to reveal that?

[Veronica Nigh]

Yeah, great question. Let's see who was. It was actually more who I worked under. Darci Vetter, actually, and Jason Hafemeister were the two folks at the staff level that I worked under that really instilled my love of trade. And Darci ended up going on to be the chief negotiator several years later. Jason Hafemeister, still one of the trade experts at USDA Foreign Service.

So there's a lot of good folks with deep knowledge in D.C. working on behalf of U.S. agriculture, so well represented. I think anybody who's come to D.C. has experienced that throughout government, but also certainly within the trade associations, National Corn Growers, American Soybean Association, all those folks that we're partners with, our customers. We certainly consider everybody partners.

And there's a lot of expertise that ripples through the trade and ag space.

[Paul Yeager]

As an old Iowa farm kid right here behind you, global trade when it comes to what we were growing was not a constant discussion. Now it is, absolutely, 100%. What happens in the trade rep's office is part of our show on a regular basis. We know that China just came to the United States, and everybody's looking for just a word that helps them out, I guess.

Let's dive then to China when it relates to fertilizer and what you're doing now. Was there conversation recently between the U.S. and China about fertilizer? Is that something that gets talked about?

[Veronica Nigh]

Yeah. You know, before I came to TFI, I spent 12 years at American Farm Bureau, and I worked the trade portfolio there. Yeah, we talked about trade constantly. When I came to TFI about three years ago, I was really struck by how global the fertilizer market is. And China plays a huge role in that. They produce 40% of the world's phosphate fertilizer.

Back in about 2021, they made some pretty big changes to how they export their fertilizer. And that really has had some pretty significant impact on the global market. They're a big player in the phosphate market, as I just mentioned. They're also a big player in the nitrogen market. So that change that they made back in '21 is one.

They restricted their exports of phosphates by about 50% relative to where they were back then. But they also made a change where they don't export during their growing season, which happens to be during our growing season as well. So yes, it's a big deal, because they're not exporting nitrogen or phosphate during our growing season. But then they are exporting during Brazil's growing season.

And so there's a lot of discussion there about, "Hey, not only are you buying a lot of the products, and that's taking away from U.S. export opportunities, but you're also giving them a pretty big leg up on that import — or excuse me, on that input sector, where you're making sure that there's a lot more product available." And therefore that has a pretty big impact on the supply and demand picture globally for those two pretty big inputs in that total NPK landscape.

So yeah, fertilizer has to be a part of that discussion, and whether or not they intend to provide stability or add to that instability.

[Paul Yeager]

Are you saying that there's instability in the fertilizer industry right now, Veronica?

[Veronica Nigh]

I don't think that's me going out too much on a limb to say that there has been some instability over the last 18 months, over the last five or six years. And unfortunately, I don't think this is all that big of a prognostication to say that I think we're in for continued instability over the foreseeable future, which is not what anybody wants to hear, either as a user of fertilizer or for my folks who are in the fertilizer supply and production business.

[Paul Yeager]

What's the biggest story then right now in the industry? Is it the suppliers or the users? Or I guess to go back to the term, the supplier or the producer, the supply and demand side of this equation, which one is the bigger impact right now on the overall story? Let's not even get into the economics of it.

[Veronica Nigh]

Sure. I think really right now it's the supply story that has the most volatility. As we look across the last eight months, it's really the Strait of Hormuz that has created the biggest challenge from a global supply perspective. I'd be remiss if I didn't say that we came into 2026 with a pretty tight global market.

And a lot of that was on the back of some tight supplies, but pretty strong demand. But when Hormuz closed, a lot of those countries are big players in the export market on nitrogen products. They're big export players in the phosphate market. And what has become more and more critical is they're a big player in the sulfur market.

And so the question as to whether or not that product will get out, how much will get out, has been really difficult for the market to handle. And from a supply perspective, we've seen that ripple through that intersection between supply and demand, and what ultimately growers — depending on what time of year that growers are in the market — has had a huge impact on the last eight months' worth of the marketplace.

And whether or not we come to an agreement in the coming months will have a significant impact as we move through into 2027.

[Paul Yeager]

This might be just a tiny bit out of your range, but is what's going on with the Strait of Hormuz a bigger impact on the fertilizer industry, or more on the diesel fuel side of the crude oil type story?

[Veronica Nigh]

Well, yes and no. It's out of my wheelhouse. But I'll also say what's interesting about fertilizer — there's so many things that are interesting about fertilizer. I have a five-year-old child, and he now mocks me. I'll be like, "Oh, fertilizer."

[Paul Yeager]

[Unclear] could spell was fertilizer, right?

[Veronica Nigh]

Yeah. We talk about it a lot at home. But so many of our products are derivations of the oil sector. So when they move, we move. So for example, sulfur is basically strictly a byproduct of oil and natural gas refinement. So when we're seeing variations in what's going on in that market, you're seeing variations in the fertilizer market.

So there's a lot happening there. What I will say is, as much volatility as we've seen in fertilizer, as challenging as it has been affordability-wise, our products are not prioritized at the same level. Even though we would consider them incredibly important for national security, for food security, they're not necessarily considered at the same level of importance for everyone as well.

So as there's been ability for tankers to move through the strait at different points in time, those vessels have moved through at a higher priority level than fertilizer vessels. So we've seen greater prioritization of movement of oil vessels, of LNG vessels, over fertilizer vessels. So they're both quite volatile. They're both very much linked, because you need natural gas to produce ammonia, because sulfur is a byproduct of oil.

There's a lot of connection between those markets. In some ways, fertilizer's more volatile; in other ways, oil is. But there's a really strong linkage there.

[Paul Yeager]

So if you become a priority, you're volatile. But if you're at the mercy of the other product, you're volatile as well. Is that what I think you're saying?

[Veronica Nigh]

It is. And it's that that region of the world produces only a few things in large volume, and the world has become quite dependent on them. Right. About 20% of the world's exports of ammonia come from west of the strait. We're looking at about 35% of the world's exports of urea come from west of the strait.

About 20% of all exports of phosphates come from west of the strait. 50% of the world's sulfur comes from west of the strait. So those are big numbers for the rest of the world to absorb, as far as the ability to make enough to offset those losses. So, you know, when we can get —

[Paul Yeager]

And it probably makes it difficult for those who are in negotiations to try to either open or find a different way out for a product, that a deal can be done, and then someone or something else will take that deal off course. And all of a sudden we're back to, "Well, now what do we do?" Is that why the market has been so volatile, not just because of the incident of closing the strait?

[Veronica Nigh]

Yes, absolutely. You think you've negotiated a delivery at a certain time, and then all of a sudden that delivery window is no longer available, and now maybe you're still contracted to purchase that product. But once it comes, you've had to pay the additional demurrage for that vessel as it's been sitting, just racking up that additional transportation cost as it's been sitting there.

Depending on how much measured risk the shipping industry thinks there is, depending on what route you're taking, there's additional insurance that's being tacked on, depending on that risk, on that transit, the length of transit. "Oh, hey, we thought we were going to go one way, and now we're going another," and that adds another two weeks on the length of shipment.

Those all sound like excuses, but it also makes it really difficult to price product. And it makes it really difficult from one week to another.

And so we're seeing so much volatility depending on when you were able to procure product. So one buyer may have been able to get it during a point of relative calm. And then the next buyer, two weeks later, it's like, "Hey, the strait closed." So for example, of all the shipments of urea that made it out of the affected region, 50% since February —

[Paul Yeager]

And the watchful eye everybody was having on those ships to make sure what's on there is what's on there. Because there's always that group that will play conspiracy: "You're not really taking that product out. You're taking this one instead." And that throws in a whole kind of a mess. Plus, the fertilizer industry is still trying to navigate what goes on between Russia and Ukraine, which may have been the preferred alternative, which now isn't an alternative.

So let's talk alternatives as a whole. And then I'm going to pivot to something that someone wants to know from you.

[Veronica Nigh]

Sure. Yeah. It's a good point, in that back in '22 when Russia invaded Ukraine, the corn markets, the wheat markets reacted strongly, as did the fertilizer markets. And the markets kind of behaved as if none of that product would make it out. And we had these significant spikes in prices.

Folks kind of figured it out, and we saw a pretty considerable amount of wheat make it out into the export market out of Russia. They've actually increased exports now, and as well with Ukraine, some pretty significant volumes of corn. So that's kind of leveled out. Fertilizer hasn't leveled out, unfortunately. Russia is unique in that they are the only country in the world that is a significant exporter across all three macronutrients. They're 15 to 20% of all exports of nitrogen, phosphorus and potassium.

So as the continued interaction between Ukraine and Russia has gone on, we are continuing to see that volatility out of Russia continue. Because Russia gets quite a lot of their revenues from oil and gas exports, from fertilizer exports, export terminals for fertilizer products have been a target for Ukrainian drone attacks. And we've seen some pretty significant reductions in fertilizer exports.

Now that being said, there has still been quite a lot of volume of fertilizer coming out of Russia. Some countries put sanctions on Russian fertilizer. The U.S. did not, actually. And we saw quite a lot of particularly nitrogen fertilizer from Russia coming into the United States. And last year in '25, when the tariffs were in place, we actually saw Russia become a much larger share of all imports of nitrogen fertilizer into the United States.

We import about 50% of all the urea that is used in the U.S. And last year, Russia was almost 40% of those imports. Now this year, we have a Russia sanctions bill that went into effect. We have been told that fertilizer is not of interest in that target, but it certainly adds some additional clouds and questions over whether or not that product is going to be available.

So all right. So now we've got the Middle East as a questionable source. Now you've got Russia as a questionable source, potentially. And then you start looking around, and you're like, "OK, who else are we looking at here from that standpoint?" You've got Oman, you've got Algeria, you've got Nigeria. And that kind of gives you the top 10 exporters from a nitrogen perspective on ammonia.

So I'm kind of talking urea in that perspective. On urea, you've got Trinidad and Tobago, you've got Algeria, and that's kind of the big boys there. On the phosphate side of life, Morocco, obviously a large exporter in the phosphate world. China, a large exporter in the phosphate world. And then we've got Saudi Arabia and Russia. It's kind of a four-horse game on the exports of phosphates.

And then potash, which has been the star of the show in that we have not seen as much volatility there. It's really Russia, Canada and Belarus. So I don't bring a lot of good news anymore. I tend to be a pretty positive person, actually, but I haven't been that much recently. But the positive certainly has been on the potash side. Canada has continued to put significant investment into growing their product supply. We've seen that market be pretty steady. One would expect that to be relatively so into '27.

[Paul Yeager]

But then we get back to your internship at the trade rep, where all of a sudden we now have trade battles with Canada, which has now put one of those sources in challenge. So I guess let's look at some alternatives. Scott in Lovington, Illinois, wanted to make sure I asked this question about fertilizer at any time.

He says, given that the situation in fertilizer is what it is today, why aren't we hearing more about chemical companies developing more affordable alternatives? He means synthetic compounds, besides the biologicals, as replacements.

[Veronica Nigh]

Yeah, that's a great question. I think the volatility that we've seen since 2020 has changed the investment picture in the fertilizer space. And we will see more and more inquiry into trying to develop those products. Nitrogen in and of itself is a chemical process. The Haber-Bosch process is what gives us ammonia.

So I think a lot of people would love to see the next innovation in the nitrogen space. How do we get to a spot where we can create more players in the world? The U.S. has a very strong nitrogen production sector because of our strong natural gas supplies. But how do we make the U.S. better in that regard?

On the phosphate and the potash side, those are mined nutrients. And just like any mined product, there is a limit, both domestically and globally, to that nutrient. Right. It's going to run out at some point. So you're right there. Additional investment in that space is certainly welcome, and folks are in that.

What I will say is, what sometimes makes innovation fantastic — turning that innovation into a marketable product at scale can sometimes be a challenge. Looping this all back to China, not to make them a scapegoat for everything, but you see countries like China who use the national purse to make huge investments in an industry.

They build it up to the point where they have the volume available to basically drown out the rest of the world's competitiveness. They undercut that investment condition. And then where's really the incentive to invest billions of dollars, which is what's necessary right now to put in a new ammonia plant, to put in a new phosphate mine?

It really undercuts that investment picture. And so that ends up being a really challenging environment to get it from that innovation space into that to-scale production level. That's not unique to fertilizer. That's a challenge the whole world has. But that is something that we're going to have to grapple with as an economy.

[Paul Yeager]

Yeah. Name the commodity where you have a big producer who might be dumping on a market to choke out competition. Absolutely, fertilizer is not unique to that. But let's look at the economist side and that supply and demand side. All right, we don't have a lot of supply. Let's lower our demand. Did farmers in 2026 in the United States lower their demand for fertilizer? Did they actually cut back?

[Veronica Nigh]

Well, we'll see. So we here at TFI don't measure sales of fertilizer. The only measure of fertilizer consumption in the United States actually comes from state tax authorities. So anybody who sells fertilizer in the United States ends up paying tax at the state level. And that ends up being the official measurement of fertilizer consumption. So we will wait for that official number once all those figures are collected.

That being said, I think you can kind of look at some of the on-the-ground discussions that you have with growers. And typically what we see in an affordability-challenged environment is that folks tend to cut back on potash and phos first and nitrogen last. That seems like it may have been the case this year as well. Potash, we won't know as much. So I think probably, yes, we will see some demand destruction in the United States, but it's hard to know a good solid number on that.

What I think is interesting globally is we kind of have three strata of fertilizer demand. You've got folks like the United States and Europe and other advanced, even like Brazil and Argentina, where we're going to make some reductions in fertilizer consumption just based on market prices.

And then you've got folks like India and Pakistan and Bangladesh, where their government purchases their fertilizer. No demand destruction. When your government is willing to go in and buy urea at $900 a ton, they sell it to their growers at $180 a ton. But the government's buying it at 900. So no demand destruction there.

It ends up being that third level, where growers don't have much of a government backstop. There's not nearly as much room for error there. And it's in the developing world where I think folks are expecting there to be the largest destruction of fertilizer demand.

So we get the question a lot, and for good reason: When are we going to see this in food prices? And where we're expecting to see that would be in the developing world, when fertilizer prices become less and less affordable. From that grower perspective, they just can't. And therefore we'll see it there before we see it in the United States, and certainly before we see it in government-procured markets.

[Paul Yeager]

Well, the stories are here about how diesel fuel is impacting shipping and trucking and food prices. Are we going to see it there? Fertilizer has a little longer tail on that global picture. So we're recording this here in early October. For the remaining quarter of the year, let's just say something gets solved tomorrow. Does the price automatically go down, or is it still just so hard to space out any type of price relief for anyone because of all the factors that you have mentioned?

[Veronica Nigh]

I think it depends on what nutrient we're talking about. On the potash side, as I said, good news story there, right? As long as we don't have, as you pointed out, any degradation of trade relations with our northern neighbor and friend.

On the nitrogen side of life, if things are resolved today, who's in the market today is South America, is India, in the big buying space. They were really bailed out in a pretty big way by China. China came in in late June with huge export sales. They hadn't been in the market prior. So if you look at urea prices today globally, they're much different than when the U.S. was in the market back in March and April.

So if the strait reopens today, I think nitrogen markets look a lot more like growers would want them to look, a lot more steady. That supply is fine. Yeah.

[Paul Yeager]

Steady is part of that discussion that we just haven't had. I mean, if there is one word, Veronica, to describe part of our discussion, it is that this has just not been steady.

[Veronica Nigh]

Yep. Unfortunately, on the phosphate side — so here's, I think, the real dark cloud. It continues to be in phosphates. What we've seen, because sulfur prices and sulfur availability, frankly, has been so low, is that we've seen phosphate production globally reduced. We've seen Morocco curtail their production by 30%, depending on the quarter. We've seen, obviously, reductions in Saudi's production, because they just can't get it out.

We've seen reductions in Russia for their own challenges. China hasn't been able to get — they import sulfur as well. No one can get sulfur. And so we've seen, and including the United States, the only sulfur really that's been available to the global market has come from the U.S. Gulf. And so we've seen sulfur prices go from about $400 to $500 a ton at the beginning of '26, and today the spot market's around $1,100 a ton.

So we've seen significant curtailment globally of phosphate production. It's hard to overcome that when there's so few producers of phosphate globally. There's so few places to get it. And every plant globally needs phosphorus. So that demand hasn't really gone away.

So I think the challenge is going to persist in phosphate markets for quite some time, because that critical input of sulfur has been so lacking in the marketplace for quite a long time. We've seen that curtailment in phosphate. So really our reserves of phosphate fertilizer globally are quite challenged. So we have to unwind the sulfur problem before we unwind the phosphate problem.

Everybody would like for that to not be the case. Our folks here domestically, the draglines that they use to dig out phosphate rock, they're continuing to operate 24/7. They just don't have the sulfur to take that rock and make it into phosphoric acid to make that phosphate fertilizer.

It's a really frustrating place for everyone to be, to want to make the product that we know growers need and just be constrained by the lack of product. So unfortunately, I think the phosphate market continues to be really the frustrating place for our industry and for the growers that we serve.

[Paul Yeager]

There's no easy answers, and it's not going to get solved overnight. Like you said, the unwinding that would have to happen if something is resolved today or tomorrow, it's just not going to snap your fingers. So indigestion is here to stay, is what I think I'm hearing you say.

[Veronica Nigh]

It is. But I think what this has pointed out to me more than anything, and we've talked about it multiple times in multiple different forms, is the volatility, the variability. It has been incredibly difficult for growers to plan, and my retailers and my importers and my producers to plan, around fertilizer over the last many years.

And I think from the growing perspective, we need some risk management tools. There's been a long history of innovation. If we talk about innovation in fertilizer, I think there's a pretty significant role for some really smart folks in the land-grant space to come up with some ideas on providing some risk management tools for growers and fertilizer.

Our markets aren't the same as they were prior to 2020. I think we've reached a little bit of a nexus where the world that we were in prior to COVID — where fertilizer, you know, no one's ever going to be excited to pay their fertilizer bill. It's like paying your light bill, right? I'm glad the lights come on, but I never thank them. And it's always been an expensive input for growers. We certainly understand that.

But at least it was more steady prior to that, and you could plan around it. It's been so difficult to plan around, but our risk management tools really have not caught up with that risk. So I think we need to figure out a space for some additional risk management tools, to make it so that you don't have to be a geographic expert.

What's going on in Russia today? What have the Chinese announced? In 2027, are they going to — are they not going to export any phosphates, just like they did in '26? You shouldn't have to watch CNN or Fox News or whatever your choice is to know how to buy fertilizer based on some pretty big international actors and what they're choosing or not choosing to do.

[Paul Yeager]

I can count in 2026, on one hand, the number of shows in our commodity discussion where I haven't talked about the Black Sea or China, let alone South America, in their relationship to our corn production, wheat market, whatever. It's been there. I mean, I think the producer is fully aware: Yes, it's a global story, and it's not going to end anytime soon.

So you've given us one positive thing. I guess I'll leave it at this. Is there anything else? Still being able to have the product is step one, but there's always that it could get worse, or we're not even going to have the product, let alone whatever the price is to pay. I mean, that has to be the darkest of the clouds.

[Veronica Nigh]

Yeah. I mean, yes, I think that's the darkest of the clouds. But we're not concerned. We do not consider there to be a strong reality that growers will not be able to source product.

[Paul Yeager]

We turned dark into sunlight right there, Veronica. See, that's a step. We made progress here today.

[Veronica Nigh]

Certainly the U.S. market is a strong enough market that we are able to source product when others are not. Now, that being said, whether or not product is available at an affordability point where everyone is able to procure the volume of fertilizer they would like to have in order to optimize their operation, I think that's a different discussion. But the physical ability to procure product is not something that folks should worry about into 2027.

[Paul Yeager]

I like it. All right, Veronica, I appreciate your time. Thank you so very much.

[Veronica Nigh]

Thanks for having me on.

[Paul Yeager]

One last time. M-I-Z…

[Veronica Nigh]

Z-O-U.

[Paul Yeager]

Today's MtoM podcast was brought to you in part by the Iowa Economic Development Authority, creating opportunity for businesses in Iowa by connecting companies, entrepreneurs and communities with the resources to thrive. Learn more at Business Iowa.

We are produced at Iowa PBS. Our production supervisor is Sean Ingrassia. His crew is Reid Denker, Kevin Rivers, Julie Knutson, Neal Kyer and David Feingold. The executive producer of Market to Market is David Miller. I'm Paul Yeager. We'll see you next time.