Roughly 20 percent of the world’s oil moves through the Strait of Hormuz near Iran. War in that region will affect oil prices, which have responded accordingly by going higher, and fertilizer prices are responding too. Josh Linville, the vice president of fertilizer for StoneX, said there’s obviously never a good time for war.
“There are certainly worse times of the year, and this is one of them. When you sit there and think about the fact that we feel kind of in the lead-up to the spring season, but from a logistical standpoint, we’re already there. It typically takes us about 30 days just to come from the loop and reach U.S. shores. And then those 30 days, or two full weeks, to get up the system. So, anything that would have shipped today is arriving on April one, April seven, in that first week. Well, that’s what we really need for our spring lead-up, so this literally could not be happening at a worse time.”
He said the markets are already showing the pressure.
“Those urea markets, as of this morning, are up over $70 a ton from Friday trade, and that’s how taken off guard this marketplace has been. I think everybody’s watching it, but nobody expected it to happen this quickly and this severe.”
The world is already short on fertilizers, and slowdowns in the Strait of Hormuz will only make it worse.
“It’s not even just that body of water. We’re already dealing with China not exporting. We’re already dealing with European production rates being 75 percent of normal. Now we’re losing the Strait of Hormuz, and all of a sudden, close to that body of water, Israel shut down their natural gas production. They see a lot of Egyptian production. They’re a major player, so we are ticking off the top 10 List of urea exporters very, very quickly.”