War in Iran Is Creating a Fertilizer Crisis Like Never Before

What It Covers

Bloomberg Intelligence analyst Alexis Maxwell explains how the US-Israeli conflict with Iran has disrupted the Strait of Hormuz at the worst possible moment — spring planting season — sending urea fertilizer prices up 25% in days, with the urea-to-corn price ratio approaching an all-time record high.

Key Questions Answered

• •Urea supply concentration: Approximately 45% of the world's tradable urea originates from Middle Eastern countries along the Persian Gulf. With China maintaining an active export ban and Western sanctions limiting Russian supply, farmers cannot easily substitute lost Middle Eastern supply. These three constraints simultaneously removed the market's three largest alternative sources.
• •Urea-to-corn price ratio: Track this ratio rather than raw urea prices to assess real farmer stress. The ratio hit $1.24 last week against an all-time record of $1.43, and with prices surging further, a new record is expected. This metric captures whether the yield bump from nitrogen application still justifies the cost.
• •Farmer response options: Farmers facing high urea prices have four concrete responses: reduce nitrogen application rates, switch crops from corn to soybeans (which require significantly less nitrogen), substitute among nitrogen product types, or forgo planting entirely. US farmers currently have more flexibility than European or Indian counterparts due to domestic supply access.
• •No strategic urea reserves exist: Unlike oil, urea has no government strategic reserve. Manufacturers operate on a make-and-ship model because storing urea for months ties up warehouse capacity and creates price risk. This structural gap means supply disruptions cannot be buffered, making timing shocks — like a spring planting disruption — disproportionately severe.
• •Food price lag is 12-24 months: Fertilizer cost increases do not appear immediately on grocery shelves. Corn planted this spring with reduced nitrogen application won't be harvested until September-October, then must move through processing. Expect lower US corn yields — potentially 182 bushels per acre versus last year's 186 — to affect food supply chains through 2026.