Impact on Supply and Prices
The global fertiliser market is under significant strain due to geopolitical disruptions in the Middle East. A new industry report released on 21st April 2026 by Rabobank highlights the closure of the Strait of Hormuz, severely impacting the availability of fertilisers and critical inputs. This has led to a supply shock, causing sharp increases in prices and volatility.
Affordability of fertilisers was already a concern in 2025, with prices for nitrogen and phosphates rising. These prices have continued to increase faster than agricultural commodity prices. This puts pressure on farm margins worldwide. RaboResearch’s fertiliser affordability index indicates a move into negative territory, with expectations for constraints throughout 2026 and only a limited recovery in the latter half of the year.
Bruno Fonseca, RaboResearch senior analyst for farm inputs, stated, “This situation raises the risk of widespread fertiliser ‘demand destruction’ as farmers globally reduce application rates, delay purchases, or shift crop choices.” Nitrogen markets are the most exposed, while phosphate markets also face pressure. Potash remains relatively balanced, but indirect effects from weak affordability in other nutrients are likely to affect demand in 2026.
The outlook for 2026 suggests continued pressure on farm economics and increased downside risks for global crop production and food price stability. Fonseca warned, “A protracted conflict or extended closure of the Strait of Hormuz could further disrupt supply chains, impacting fertiliser supply, prices, and demand over an extended period.”
Australian Farmers Face Challenges
Australian farmers are experiencing increased margin pressure due to the conflict in the Middle East. Paul Joules, a commodities analyst at RaboResearch, pointed out the vulnerability of Australia’s fertiliser supply chain, heavily reliant on imports of urea and MAP. Joules observed, “The price of Middle East granular urea surged 94 per cent year to date, while DAP prices increased by 11 per cent.” Potash prices remained more stable with a 2 per cent rise.
Despite a stronger Australian dollar, input prices have remained high due to global supply constraints. This scenario may lead Australian farmers to favour crops like barley and canola, which offer greater margin resilience. RaboResearch forecasts a decline in fertiliser consumption in Australia as farmers adjust cropping rotations in response to elevated prices.
Ongoing geopolitical tensions and supply chain disruptions pose a significant challenge to the global fertiliser market. Rabobank’s report suggests that even if tensions ease, normalisation of the market will be slow, with long-term implications for agricultural productivity and food security.
Last updated: 21 April 2026, 4:04 pm
