There’s no question that the war in Iran and problems in the nearby Strait of Hormuz have had a major impact on the worldwide fertilizer market. Dr. Mark Welch, a grain marketing specialist for Texas A&M University, said the question now is how long those impacts will linger.
“The concern I’m hearing now, and even in the energy markets, is as hard as the shock will be to absorb right now, the real question is, how long will these impacts linger? Even if we do see a full cessation of the hostilities, there has been a tremendous amount of damage and disruption to infrastructure and to transportation facilities, and just the tone and the trading environment for these critical commodities is just different now than we were looking at some 30 days ago.”
That level of uncertainty likely means impacts for some time.
“It’s likely that the degree of uncertainty and vulnerability is likely to have price impacts for a significant period of time. The concern that I’m hearing, the conversation I’m hearing is practically whether, short-term, especially, you know, we’ve laid in much of our fertilizer needs for 2026, and with higher commodity prices, maybe we can bear this increase we’re seeing now. But what about 2027?”
The impacts likely stick around through at least 2027.
“That’s when we will likely see a much longer-term impact of these higher input costs. But pretty well figure on this higher input cost structure that was already high, that was already squeezing margins, has just gotten a magnitude higher.”