Center for Agriculture and the Economy
Leveraging expertise from the Kansas City Fed, the Center provides timely analysis of industry developments and conducts ongoing research on the agricultural economy.
Disruptions in the Strait of Hormuz Pressure Fertilizer Prices Ahead of the U.S. Growing Season
March 26, 2026
By Ayesha Cooray
Producers currently purchasing fertilizer ahead of the planting season are facing significant cost increases given the ongoing conflict in the Middle East. The Strait of Hormuz is a key shipping channel for globally traded fertilizers. Notably, more than a third of global exports of urea, a widely used solid nitrogen fertilizer, typically pass through this waterway. Since the beginning of the year, the price of urea has increased by about 55%, sharply rising with the onset of conflict with Iran.
As a nitrogen-intensive crop, fertilizer purchases comprise a large component of corn production expenses. As such, corn growers face higher input costs with supply shocks in the urea market. Urea markets have already been under pressure from persistently high natural gas costs alongside the Russia-Ukraine war and export restrictions from China. At present, the relative price of urea, or implied trade-off between corn and urea, is close to the record high experienced in 2021 amidst natural gas supply disruptions. However, recent increases in the price of corn may support profitability. In addition, many producers secured fertilizer for this year’s growing season last Fall ahead of the surge in prices. Going forward, developments in global urea markets and movement in commodity prices will be important for evaluating the outlook for corn profitability.
Note: The relative price of urea to corn is calculated as the ratio of the Urea U.S. FOB Gulf $/Ton to the Chicago Mercantile Exchange’s 1st Expiring Contract Settlement Corn Futures Price, with cents/bu converted to $/bu.
Data Sources: Bloomberg and Haver.
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Through regular surveys, analysis and connections across the industry, the Kansas City Fed has had a longstanding focus on U.S. and global agriculture. Leveraging this expertise, the Center for Agriculture and the Economy serves as a resource within the Federal Reserve System by providing timely analysis of industry developments and conducting ongoing research on the agricultural economy. The Kansas City Fed is committed to understanding developments in the agricultural economy and gathering perspectives from rural America in order to include them in discussions on the national economy.
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Agriculture is central to the Kansas City Fed’s 10th District’s economy, from farm production and food manufacturing to agricultural banking and finance. Through its regular surveys, analysis and connections across the industry, the Kansas City Fed has had a longstanding focus on the U.S. and global agricultural economy. At the same time, connecting with stakeholders and ag industry professionals through events, round tables and conversations is critical to the Bank’s work.