Market and product

Compiled by Bao Hien

Throughout 2026, Josh Linville — Vice President of Fertilizer at StoneX, a commodities-focused financial services firm — has continuously tracked and commented on the impact of the Strait of Hormuz crisis on global fertilizer markets. His string of analyses, spanning from March through August 2026, traces a story unfolding in several distinct phases — from the initial shock and peak tension, to a period of "demand destruction," and a state of ambiguity that persists to this day.

Phase 1: The Initial Shock (Early March 2026)

Even before the conflict in Iran broke out, nitrogen and phosphate fertilizer prices were already elevated due to export bans from China — the world's second-largest nitrogen exporter — which had pushed urea prices up nearly twofold since early December 2025, while potash prices had risen about 10% since the start of the year. Once the Strait of Hormuz was closed, the situation deteriorated rapidly: according to Linville, urea prices jumped by roughly $70 per tonne within just a few days, moving from the high $400s into the mid-$500 range per tonne — reflecting how quickly rising input and logistics costs passed through into offer prices.

Linville described this as "the worst-case nightmare scenario imaginable" for the fertilizer industry, arriving at the most sensitive point of the year — right before the US spring planting season. The reason lies in the fact that natural gas, the primary feedstock for nitrogen fertilizer, has its largest reserves concentrated precisely in the Persian Gulf region, while roughly half of the world's exported sulfur — used to produce sulfuric acid, essential for phosphate fertilizer — also passes through that same route.

Phase 2: Peak Tension (Mid-March 2026)

By mid-March, StoneX described the situation as having entered its "second week" of the strait being almost completely closed — effectively cutting off Qatar and Iran, two of the world's leading urea exporters, from the international market. At the same time, three of the world's top 10 exporters of urea and anhydrous ammonia — Qatar, Saudi Arabia, and Iran — all sat behind the blockaded strait. The Israel-US conflict with Iran also threatened to disrupt natural gas flows to Egypt, another top exporter, while India — one of the world's largest fertilizer buyers — was dealing with its own domestic production problems.

According to Linville, this was not simply a crisis caused by the Iran conflict alone, but the result of a global fertilizer market that had already been running on depleted reserves beforehand. An estimated 50% of global urea exports were "locked" behind the blockaded strait.

Phase 3: "Demand Destruction" Rather Than Severe Shortage (May 2026)

By mid-May, after roughly 12 consecutive weeks of the strait being nearly closed, the global fertilizer market — contrary to earlier fears — had avoided a severe shortage during the Northern Hemisphere spring season. Instead, StoneX observed a different phenomenon: high prices forced farmers to reassess how much fertilizer they were applying, cutting back on application rates — a process referred to as "demand destruction." According to Linville, this signaled that the fertilizer market was entering a new phase, where weakening farmer demand had become just as important a factor as geopolitical supply disruption — though he also cautioned that this "demand destruction" might only delay rather than eliminate the risk of future supply disruptions.

Phase 4: Technically Open, Still Clogged in Practice (July 2026)

By mid-July, after the US dropped its plan to impose a 20% fee on cargo passing through the Strait of Hormuz, the situation still hadn't meaningfully improved. According to Linville, "it's basically still closed" — while many ships had left the region, very few had returned. He noted that the nominal distinction between "open" and "closed" was perhaps less important than what was actually happening: ships were still moving, but nowhere near normal levels. China, at the time, was still restricting phosphate exports while maintaining uncertainty around its urea export policy through continual quota changes.

Linville stressed that the US needs to stop thinking in terms of "putting a Band-Aid on an open wound," and instead focus on ramping up domestic nitrogen fertilizer production, building stronger relationships with phosphate-exporting countries, and adopting longer-term thinking to avoid repeating this crisis cycle.

"The 2027 Shadow"

A mid-April 2026 analysis coined a term for the crisis's long-term risk: "The 2027 Shadow." Even though most US farmers had by then secured what they needed for the immediate spring season, the blockade was turning into a longer-term threat that could extend all the way into 2027. The US produces most of its own UAN (liquid nitrogen solution) and anhydrous ammonia domestically, but remains heavily reliant on imports for urea — the fertilizer type most directly affected by the crisis.

Latest Update: Signs of Cooling

The most recent development — China's expected export of at least 1.2 million tonnes of urea to India in the August 2026 tender, alongside tender prices falling roughly 12% in just over two months — points to clearer signs of cooling compared to earlier phases, though largely thanks to China's loosened export quota policy rather than any definitive resolution of the situation at the Strait of Hormuz itself.