New Report: Fertilizer Prices to Remain Elevated Through 2028

Fertilizer prices are expected to remain above pre-Iran war levels through 2028, creating sustained pressure on farmers and agricultural retailers as global conflicts and supply chain disruptions continue to reshape the nutrient market. This according to a new report from CoBank’s Knowledge Exchange. Although prices have retreated from the historic highs seen at the start of the war, elevated fertilizer expenses remain a major headwind for the U.S. agricultural sector.

CoBank economists note geopolitical instability in the Middle East, constrained feedstock supplies, and tightening phosphate availability will keep fertilizer costs elevated for ag retailers, farm supply cooperatives, and farmers for at least another year and likely into 2028.

The Middle East plays an outsized role in the international fertilizer market, supplying more than 60 million tons of fertilizers and raw materials annually, with 45 million tons shipped via the Strait of Hormuz. Notably, 50% of globally traded sulfur and over 30% of global urea exports originate from the region, making these commodities particularly vulnerable to supply disruptions. For U.S. agricultural retailers, the Iran war has created the greatest price exposure for urea and phosphate due to growing demand for these products imported through the Persian Gulf.

Conflict in the region has resulted in fertilizer plant shutdowns and damaged facilities that will require significant time and resources to repair. An estimated 31 ammonia plants in the Middle East have been directly impacted by the war or shut down completely. Across India, Pakistan and Bangladesh, operations at 49 plants have been curtailed or halted due to limited feedstock availability. Meanwhile, at least 20 plants in Russia have been damaged by Ukrainian drone attacks, further exacerbating global supply challenges.

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The disruptions have reshaped global trade flows and increased fertilizer prices for U.S. agricultural retailers, particularly for Diammonium Phosphate and Monoammonium Phosphate. While most domestic use is supplied by U.S. production, 17% of DAP/MAP imports originate from the Persian Gulf — now one of the most unstable supply regions.

Phosphate markets are expected to remain especially tight. Even before the war, global phosphate supplies were constrained, and rising sulfur and ammonia costs have further limited production. Ammonia and sulfur are the two biggest variable cost inputs for phosphate production, and three of the world’s 10 largest ammonia exporters are located behind the Strait of Hormuz. China, the largest producer and exporter of phosphate fertilizer, has banned phosphate exports through August and high sulfur prices may lead to an extension of the ban.

“The ripple effect of the Middle East conflict, compounded with tight supplies, will create higher fertilizer prices and complicate sourcing well into 2027 and beyond,” said Jacqui Fatka, farm supply and biofuels economist with CoBank. “Availability and affordability concerns have already triggered demand destruction and deferral, making the price outlook increasingly difficult to predict. Ultimately, market recovery will depend on stabilization in the Middle East, lower sulfur prices and shifts in global demand patterns.”

To read the report in further detail, visit CoBank.com.