Market and product

According to the World Bank, fertilizer prices index rose by more than 12% in the first quarter of 2026, marking the sixth increase over the past seven quarters. On a monthly basis, prices in March 2026 reached their highest level since 2022. The recent surge in the index largely reflects the impact on exports of fertilizers and inputs from the closure of the Strait of Hormuz. Price increases have been most pronounced for urea, with more moderate gains for other fertilizer types. 

The index is projected to increase by more than 30 percent in 2026, supported by higher input costs—particularly for nitrogen- and phosphate-based fertilizers— and resilient demand. The increase, however, remains well below the sharp spikes of 2021 and 2022 of over 100 and 55 percent, respectively, which were driven by export disruptions in Russia and Belarus alongside elevated input costs—particularly for natural gas in Europe and Asian LNG. Prices are expected to ease in 2027 as exports recover and additional global supplies come online. Nonetheless, risks to the price outlook remain tilted to the upside, including the possibility of higher-than-expected energy prices and further production and trade disruptions associated with prolonged constraints on shipping through the Strait of Hormuz, as well as undetermined damage to production and export facilities of all related materials.

Nitrogen (urea)

Nitrogen (urea) prices averaged $725 per metric ton ($/mt) in March, an increase of nearly 55 percent from February and the highest level since April 2022 (figure 18.A). The surge reflects a near halt in exports from the Middle East region following the closure of the Strait of Hormuz, a critical shipping route for nitrogen-based fertilizers produced in the region. In 2024, the region accounted for almost one quarter of global exports of urea—the most widely used nitrogen fertilizer—and more than 15 percent of global ammonia exports (a key input into the production of urea), according to data from the International Fertilizer Association.

In addition to shipping disruptions, production outages have further constrained supply. The Islamic Republic of Iran has ceased ammonia production due to the conflict, while Qatar has suspended production of urea, ammonia, and sulfur following damage to its production facilities, leading to price increases in some of these inputs. Production of urea and ammonia has been reduced in India (also the largest importer of both) because of declines in LNG supply. Further production curtailments and demand destruction are likely, which would negatively impact crop yields with a lag in some locations. On the policy front, there are reports that China (the world’s largest producer and second largest exporter of nitrogen-based fertilizers), may curb exports starting in the second quarter to prevent domestic fertilizer prices from rising. Indeed, fertilizer exports from China during the first two months of the past three years (including 2026) have been roughly one-fifth of the levels observed over the preceding three-year period. Markedly high urea prices have pushed the ratio of urea to food prices, a rough measure of fertilizer affordability, to levels not seen since mid-2022, implying tighter margins for farmers. 

Urea prices are projected to rise by nearly 60 percent in 2026 (y/y), with market conditions expected to remain tight for much of this year before declining by about 25 percent in 2027 as exports from the Middle East recover and natural gas prices moderate. Some modest increase in production capacity in Europe is also anticipated, following disruptions caused by the 2022 surge in natural gas prices. Key upside risks include a longer-than-assumed phase of acute shipping constraints in the Middle East or a re-escalation of conflict, which could result in deepening shortages. Furthermore, concerns about domestic fertilizer availability could induce trade restrictions by major exporters, while higher-than-expected natural gas prices could further push up input costs (natural gas accounts for 80–90 percent of production costs for ammonia, the primary urea feedstock). If such risks materialize, average urea prices in 2026 could exceed the 2022 average of $700/mt—the second-highest level in real terms after 1974. 

DAP (diammonium phosphate) 

DAP prices rose moderately in March but declined nearly 9 percent on average in the quarter, but were 6 percent above its level a year earlier. Their relative stability partly reflects the easing of China’s phosphate export restrictions, with exports rebounding in the second half of 2025 after a roughly 10 percent decline earlier in the year. The ratio of DAP to food prices has declined modestly, rendering DAP more affordable than a year earlier.

DAP prices are projected to increase by nearly 6 percent in 2026 and decline by 10 percent in 2027 as new capacity comes online. The forecasts, however, are subject to two key risks that could push prices much higher. First, renewed export restrictions by China. Second, a prolonged closure of the Strait of Hormuz could significantly disrupt global fertilizer trade. Nearly 15 percent of global DAP exports go through the Strait, as does about one-third of global trade in sulfur and around 15 percent of trade in ammonia, both critical inputs for DAP production. Nearly half of DAP and sulfur global production is internationally traded. Producer OCP in Morocco has brought forward maintenance on phosphate production that will reduce Q2/2026 output, likely because of disruptions to sulfur and ammonia. 

MOP (muriate of potash, or potassium chloride) 

MOP prices rose by more than 5 percent in 2026Q1 (q/q) bringing them to nearly 17 percent above their level a year earlier. Affordability of MOP relative to food has remained close to pre-2020 levels over the past five quarters. Overall, the global potash market remains well-supplied. Exports from Belarus have been rising following the easing of U.S. sanctions. Although EU sanctions continue to restrict shipments through Lithuania, alternative trade routes for Belarusian and Russian exports, together with higher exports from Canada and the Lao People’s Democratic Republic, are expected to sustain ample supply this year and next. 

MOP prices are expected to rise by about 12 percent in 2026, before declining by 6 percent in 2027. In the longer term, the introduction of significant new production capacity, particularly in Canada (the world’s largest potash producer and exporter), could exert further downward pressure on prices. Overall, risks to the price outlook appear broadly balanced, as MOP production and exports are not heavily dependent on the Middle East.