President Donald Trump announced a plan for a full U.S. Navy blockade in the Strait of Hormuz. The question across the energy and fertilizer industries is what that will do to prices. Josh Linville, vice president of fertilizer for StoneX, said we’re in uncharted territory.
“It just continues to make a bad situation worse for the global nitrogen markets. Every day that the strait remains closed has a massive impact on supplies. Every day the Strait of Hormuz is closed down, it has a massive impact on the phosphate markets, so it’s unfortunate. I mean, if you would have told me the day before the attack happened, ‘This is what’s going to happen. You’re going to see the Strait of Hormuz shut down, even for a short term.’ I probably would have sat there and said, ‘Yeah, no, that’s something we’ve always talked about. It ain’t going to happen.’ And then it did shut down. If you had told me it was going to last six-plus weeks, I would have always said there’s no way. It’s too important. Here we are. Man, we’re all making educated guesses. We have never, ever seen anything anywhere close to this magnitude of an issue with global fertilizer supplies.”
While most farmers have spring needs met, this is rapidly becoming a long-term supply issue, starting in the fall and into 2027.
“So, there are layers to this, and this is where a lot of this confusion starts to come in. When we look at our overall, let’s just say nitrogen, most of the UAN and anhydrous that we need, we produce. We import very little of it, so we’re in good shape on those two. Urea, we do import quite a bit, but when you look at what our imports have been through March and what we think is coming for the month of April, we think we’re in good shape. Not great. I’d feel better if that stuff was actually sitting here. But we’re in good shape. The big fear is, like this week, we’ve got an India tender that’s going on. They’re looking for 2.5 million tons. If their price is high enough, these vessels that are en route to the U.S. could easily be turned around and headed back to India if they’re a higher payer. And that’s what my biggest concern is, and that’s why I keep saying we’re in good shape, not great shape.”
Even fertilizer that’s made it to America still faces another layer of questions.
Well, just because it’s sitting in North America, for example, doesn’t mean that’s where it needs to be. Now you’ve got to worry about the inland basis. Are those tons in place? Have they actually shipped? Are there any problems with the river situation, the rail situation, or the truck situation? This is where we start talking. You need to be having that conversation with your supplier, right? Are the tons in place? Do we need to be committing to these? What are you thinking? And primarily, this is for the side dress season. Every layer has its own dangers. And overall, the whole situation is rough for nitrogen. I think that we’ll be okay. I think we’re in good shape. But again, good can turn around very, very quickly.”