Corn, soybean prices surge as Hormuz closure squeezes fertilizer supply

Global agricultural markets are facing mounting pressure as the de facto closure of the Strait of Hormuz disrupts fertilizer shipments, with diammonium phosphate prices surging 28.4% in the first nine months of the year to $802.5 per metric ton, according to data compiled by Anadolu Agency. The blockade of the vital waterway — through which approximately one-third of global fertilizer trade normally passes — has constrained access to critical agricultural inputs including sulfur and ammonia.

Rising crude oil risk premiums have simultaneously driven up diesel fuel costs, compounding pressures on farm operations already struggling with elevated natural gas and ammonia prices. The price of diammonium phosphate, a staple input for corn and soybean cultivation, climbed from $625 per ton at the end of 2025 to current levels, pushing corn prices up 13.3% and soybeans 22.6%. Farmers have responded by reducing fertilizer applications, weighing on global yield expectations for the 2026-2027 planting season.

Analyst warnings

Kutay Guzgor, investment research director at participation bank Kuveyt Turk, told Anadolu that supply shocks have extended well beyond urea-based nitrogen fertilizers. "Diammonium phosphate fertilizer is affected by logistical bottlenecks, and that a significant portion of the sulfur and ammonia supplies vital for its production pass through the Strait of Hormuz creates persistent rigidity in phosphate fertilizer prices," he said.

Guzgor noted that despite a brief recovery in shipments during a temporary US-Iran agreement, the subsequent collapse of the ceasefire and resurgence of hostilities in mid-July kept export volumes well below pre-war levels. Alternative global suppliers have helped reduce immediate supply gaps by rerouting supply chains across longer distances, a shift that continues to increase baseline freight costs, he added.

Yield concerns

The logistical bottleneck risks cementing a structural decline in agricultural yield expectations as farmers compromise on targeted fertilizer applications, Guzgor stated. He warned that a renewed spike in regional energy prices could trigger another surge in natural gas and nitrogen-based fertilizer costs, with impacts on planting areas and productivity proving decisive next year.

"While fertilizer costs increase farmers' production costs and squeeze profit margins, the prolonged persistence of high costs could lead to reduced fertilizer use, shifts in allocation, or a shift towards crops needing less fertilizer – a decrease in the use of nitrogen phosphorus and potassium may limit producer costs in the short term but ultimately pressure yields in the coming period," Guzgor said. Export volumes through the Strait remain well below pre-war levels following the collapse of the temporary US-Iran ceasefire in mid-July.