Fertilizer prices are likely to remain elevated through 2027 and beyond, according to a new research report from CoBank, one of the largest private providers of credit to the U.S. rural economy.
Unlike the fertilizer price shock that followed Russia’s invasion of Ukraine in 2022, the current disruption is rooted more heavily in damaged production capacity, constrained raw materials, and uncertain recovery timelines, said the CoBank report, released last week.
An estimated 31 ammonia plants in the Middle East have been affected or shut down amid U.S.-Iran military strikes, while dozens of plants in South Asia have curtailed production because of feedstock shortages and at least 20 Russian plants have suffered damage from Ukrainian drone attacks.
The Middle East is especially important to fertilizer markets, supplying more than 60 million tonnes of fertilizers and raw materials annually, including about 45 million tonnes shipped through the Strait of Hormuz. The region accounts for roughly half of globally traded sulfur and more than 30% of global urea exports.
Phosphate markets appear particularly vulnerable. Ammonia and sulfur are the two largest variable costs in phosphate production, while China, the world’s largest phosphate producer and exporter, has restricted exports. Tight raw material supplies have already reduced global phosphate production forecasts for 2026.
North Dakota State University projections cited by CoBank suggest fertilizer prices could rise before settling into a prolonged plateau above levels seen before the Iran war through 2028. Its projected 2027 averages include US$496/tonne for urea, $666 for DAP, $660 for MAP and $619 for ammonia.
High prices are already changing farmer behaviour. Growers have reduced phosphate and potassium applications by as much as 10% to 15% in recent years while largely protecting nitrogen use because of its importance to yield. Tight farm margins could encourage further reductions or push more fertilizer purchases into the spring, CoBank said.
CoBank said fertilizer markets are unlikely to return quickly to pre-war conditions, with elevated costs and sourcing risks expected to persist through the next several crop years.
The full report is available here:
https://www.cobank.com/knowledge-exchange/why-higher-fertilizer-prices-are-here-to-stay
