Escalating conflict between Israel and Iran is once again exposing the fragility of global fertilizer trade routes, particularly for urea, a nitrogen-based input critical to global grain and corn production. While a supply choke point remains unlikely for now, the ripple effects are already being felt in key import-dependent nations.
Urea Trade Concentration Sparks Renewed Volatility
Nearly 50% of global urea exports originate from the Middle East, placing the market on edge as geopolitical tensions raise the specter of a potential disruption through the Strait of Hormuz. Although a full closure appears unlikely, analysts warn that the underlying risk stems from structural overreliance on a handful of supply nodes.
“Each year seems to deliver a fresh reminder of just how exposed the fertilizer trade remains,” said Rabobank senior analyst Samuel Taylor in a report earlier in July, pointing to prior supply shocks triggered by the pandemic and the Russia-Ukraine conflict. Natural gas price spikes in Europe, a key input for nitrogen-based fertilizers, and pandemic-era logistics breakdowns have made fertilizer markets among the most volatile commodity sectors since 2020.
Recent Mideast unrest has already pushed urea prices higher in Brazil, where the domestic market is heavily import-dependent. The country sources over 90% of its urea from abroad, making it acutely vulnerable to international pricing and shipping volatility.
India, Brazil Face Price Pressure
India, too, remains exposed. As one of the world’s largest fertilizer importers, the country’s strategic reserves and government subsidies may soften immediate impact, but extended geopolitical disruptions could strain public finances and procurement timelines ahead of the fall planting season.
In the U.S., the peak spring application window has passed, but Taylor warned that farmers shouldn’t expect prices to retreat before the next cycle. “You’re going to face cost price inflation into next year,” he said, adding that autumn application decisions will be made under tighter budget scrutiny and growing input volatility.
Meanwhile, the urea futures curve continues to reflect elevated risk premiums, particularly in emerging markets with constrained purchasing power or exposure to long-haul logistics routes. Recent trade data also shows an uptick in fertilizer booking activity by Southeast Asian buyers seeking to get ahead of further pricing spikes.
The Blind Spot in Fertilizer Risk Planning
While pricing and supply volatility dominate headlines, the deeper operational risk lies in contract flexibility and sourcing agility. Many buyers in emerging markets remain locked into long-term contracts with minimal volume elasticity, limiting their ability to pivot during disruption. In contrast, several European buyers, burned by the 2022 gas crisis, have begun layering optionality into their procurement strategies, including multi-origin sourcing frameworks and flexible delivery clauses. For global agriculture stakeholders, resilience will depend not just on inventory levels, but on the structural terms embedded in their upstream agreements.
