Global Fertilizer Prices Projected to Rise Over 30% as Supply Disruptions Persist
Oxford Economics report highlights the impact of shipping disruptions through the Strait of Hormuz on global fertilizer prices and agricultural markets.
Global fertilizer prices are projected to rise more than 30 percent in 2026 compared to 2025 levels, according to a recent report by Oxford Economics.
The report attributes this increase to conflict-related shipping disruptions through the Strait of Hormuz, which are tightening global supply chains at a time when grain-to-fertilizer price ratios have fallen to historic lows.
The grain-to-fertilizer price ratio measure suggests that even though fertilizer prices have not yet surpassed previous peaks in nominal terms, their cost relative to crop revenues has become more burdensome than at any point in over six decades.
This increasing pressure on farm margins and crop yields raises the risk of reduced application rates and weaker yields.
Kiran Ahmed, lead economist at Oxford Economics, notes that fertilizer price forecasts have been revised upward since the onset of the conflict.
The report now expects fertilizer price increases to exceed 30 percent in 2026 compared to 2025, with urea prices likely to rise even faster.
Traffic through the Strait of Hormuz is expected to remain constrained through the second quarter of 2026, with shipping gradually recovering from July.
However, port congestion and logistical bottlenecks could continue disrupting fertilizer flows through year-end, particularly if energy cargoes are prioritized.
The impact of these disruptions will vary significantly across crops and regions.
Rice, maize, and wheat face the greatest exposure due to their heavy reliance on urea-based fertilizers.
Rice is considered particularly vulnerable due to current planting cycles, while parts of Asia, along with Australia and Brazil, remain highly dependent on Middle Eastern fertilizer imports.
A key measure of affordability—the grains-to-urea price ratio—has dropped to its lowest level since records began in 1960, highlighting the growing burden on farmers even though nominal fertilizer prices remain below previous peaks.
The report warns that the hike in fertilizer prices could have a wider impact on global usage than initially suggested.
Recent market data indicates continued volatility in fertilizer markets.
Urea traded at $502.50 per tonne on May 22, down 7.37 percent from the previous day and more than 27 percent lower over the past month, according to Trading Economics data.
Prices, however, remained nearly 10 percent higher year on year.
The report also notes that while fertilizer demand is generally considered relatively inelastic, with farmers tending to prioritize its use even as prices rise, there are significant differences across regions and income levels.
In lower-income and least developed countries, farmers are more likely to reduce usage due to limited financial capacity and weaker government support.
Oxford Economics warns that the risks remain tilted toward a longer disruption in the Strait of Hormuz.
Further delays to a full reopening could intensify pressure on global food prices, harvests, and economic growth.
The report attributes this increase to conflict-related shipping disruptions through the Strait of Hormuz, which are tightening global supply chains at a time when grain-to-fertilizer price ratios have fallen to historic lows.
The grain-to-fertilizer price ratio measure suggests that even though fertilizer prices have not yet surpassed previous peaks in nominal terms, their cost relative to crop revenues has become more burdensome than at any point in over six decades.
This increasing pressure on farm margins and crop yields raises the risk of reduced application rates and weaker yields.
Kiran Ahmed, lead economist at Oxford Economics, notes that fertilizer price forecasts have been revised upward since the onset of the conflict.
The report now expects fertilizer price increases to exceed 30 percent in 2026 compared to 2025, with urea prices likely to rise even faster.
Traffic through the Strait of Hormuz is expected to remain constrained through the second quarter of 2026, with shipping gradually recovering from July.
However, port congestion and logistical bottlenecks could continue disrupting fertilizer flows through year-end, particularly if energy cargoes are prioritized.
The impact of these disruptions will vary significantly across crops and regions.
Rice, maize, and wheat face the greatest exposure due to their heavy reliance on urea-based fertilizers.
Rice is considered particularly vulnerable due to current planting cycles, while parts of Asia, along with Australia and Brazil, remain highly dependent on Middle Eastern fertilizer imports.
A key measure of affordability—the grains-to-urea price ratio—has dropped to its lowest level since records began in 1960, highlighting the growing burden on farmers even though nominal fertilizer prices remain below previous peaks.
The report warns that the hike in fertilizer prices could have a wider impact on global usage than initially suggested.
Recent market data indicates continued volatility in fertilizer markets.
Urea traded at $502.50 per tonne on May 22, down 7.37 percent from the previous day and more than 27 percent lower over the past month, according to Trading Economics data.
Prices, however, remained nearly 10 percent higher year on year.
The report also notes that while fertilizer demand is generally considered relatively inelastic, with farmers tending to prioritize its use even as prices rise, there are significant differences across regions and income levels.
In lower-income and least developed countries, farmers are more likely to reduce usage due to limited financial capacity and weaker government support.
Oxford Economics warns that the risks remain tilted toward a longer disruption in the Strait of Hormuz.
Further delays to a full reopening could intensify pressure on global food prices, harvests, and economic growth.
