Semiannual fertilizer outlook: Tensions in the Middle East trigger disruptions in the fertilizer market

Global fertilizer markets ended Q1 2026 under severe strain. Escalating geopolitical disruption in the Middle East and the effective closure of the Strait of Hormuz have removed a substantial volume of fertilizers and critical inputs from global trade, triggering an abrupt supply shock that cannot be quickly replaced. The resulting market environment is characterized by tight availability, sharply higher prices, and elevated volatility across major nutrients.

Fertilizer affordability has deteriorated rapidly. Prices for nitrogen and phosphates have risen far faster than agricultural commodity prices, compressing farm margins and accelerating affordability stress. RaboResearch's fertilizer affordability index has moved decisively into negative territory and is expected to remain constrained throughout 2026, with only limited recovery in the second half of the year. This raises the risk of widespread demand destruction as farmers reduce application rates, delay purchases, or shift crop choices.

Nitrogen markets are the most exposed, and phosphate markets are similarly pressured. While potash remains comparatively more balanced, indirect effects from weak affordability in other nutrients are expected to weigh modestly on demand in 2026. Overall, the fertilizer market faces a prolonged period of tight supply, weak affordability, and heightened price risk. Even if geopolitical tensions ease, normalization will be slow. The outlook for 2026 points to continued pressure on farm economics and increased downside risks for global crop production and food price stability.