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Fertilizer Prices Fall After Iran Says Strait Is Open
Urea Drops About 18%, Bringing Farmers Relief, but Stranded Cargoes Will Take More Than a Month to Arrive
Fertilizer prices were dropping sharply April 17 after Iran said the Strait of Hormuz was open, bringing relief to farmers even as they still face delays in deliveries.
Prices for urea, the most commonly used form of nitrogen, fell about 18% to $640 per ton in New Orleans, down from a peak earlier this week of $780, according to Bloomberg Green Markets. That’s also after fertilizer’s costs this week hit a record relative to corn, the most widely grown U.S. crop.
“Prices are falling fast,” said Alexis Maxwell, a senior agriculture analyst at Bloomberg Intelligence. “U.S. farmers won’t get a slug of supply, but they will benefit from lower prices on news the strait reopened.”
MORE: Tankers Approach Hormuz but Iran Sends Conflicting Signals
While growers who were already in the early days of the spring planting season should see immediate price relief, it will still take more than a month for any fresh cargoes to arrive in the U.S. Gulf from the Middle East and then get shipped upriver to the Midwestern crop belt.
“That won’t save me for planting season,” Sarah Degn said of the lower fertilizer costs. Like other U.S. farmers, she decided to plant less corn due to high prices for fertilizer in her Montana fields near the border with North Dakota.
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Iran said April 17 that the Strait of Hormuz was open to all commercial traffic as part of a ceasefire in Lebanon. The strait, which handles about a third of world crop nutrient supplies, has remained closed throughout the conflict, prolonging an energy and fertilizer crisis and threatening production of key crops worldwide.
President Donald Trump told Bloomberg in a phone interview that Iran agreed to suspend its nuclear program indefinitely, although the Middle Eastern nation has not commented on any deal beyond the strait opening.
RELATED: USDA Seeks Farmers' Input on Fertilizer Probe as Prices Soar
The Trump administration has been seeking ways to provide fertilizer relief for farmers, with Agriculture Secretary Brooke Rollins saying it could take a “couple of months” for costs to come down.
Meanwhile, traders were focused on traffic in the strait, with relatively minimal passings in the initial hours of the ceasefire.
“In my view for the near term, today’s announcements does not do much for the fertilizer market unless we see a substantial increase in vessel traffic crossing the strait without any tolls,” said Quan Nguyen, senior fertilizer analyst at StoneX. “So traffic will not likely increase much, but that could change, and we just have to wait and see.”
Written by Michael Hirtzer, Erin Ailworth and Pyotr Kozlov
