Key Takeaways: Navigating Shockwaves in Agriculture

Executive Summary

The webinar delivers an integrated, impartial view of how Middle East conflict risk is reshaping fertilizer, crop, and protein markets, with direct implications for costs, trade flows, and farm margins. Market‑reflective price assessments show sharp spikes in sulfur and ammonia and renewed tightness in urea and DAP, driven by transit risks through the Strait of Hormuz, refinery outages, and energy costs—pressuring nitrogen affordability most. While alternative merchant ammonia supply could offset Arab Gulf shortfalls on paper, timing and logistics sustain upside risk to nitrogen prices. EU nitrogen imports were front‑loaded ahead of CBAM, dampening Q1 2026 volumes, while added costs, tariffs, and policy uncertainty constrain near‑term demand. Crop benchmarks for wheat, corn, rice, and soybeans have been relatively stable year over year versus the 2021–22 Ukraine shock; comfortable global wheat stocks among key exporters and weak import demand from China limit price upside, though an oil‑price shock scenario would lift wheat benchmarks modestly. Affordability pressure is highest for nitrogen, risking lower application rates and yields. Downstream, EU protein exposure varies: dairy is most sensitive to Middle East demand and has seen the clearest price response; chicken and pork are steadier, with specific supply factors at play; beef has softened on weaker demand. Regionally, APAC’s low stocks sustain import needs; MENA crops may curb imports; Australia faces elevated fertilizer costs prompting switches to less fertilizer‑intensive crops. S&P Global Energy’s independent, market‑reflective benchmarks and analyst‑led outlooks connect real‑time disruptions to long‑term implications, enabling customers to make superior decisions with confidence amid ongoing volatility.

Speakers

William Bland, Associate Director, Price Reporting - Agriculture and Food, S&P Global Energy
Sarah Joy Reid, Sr Principal Analyst, Europe Proteins, S&P Global Energy
Elisavet Levogianni, Senior Price Reporter, Minerals & Fertilizer, S&P Global Energy
Pierre Cera-huelva, Associate Director, Lead Europe Crops, S&P Global Energy

Key Takeaways

1. Fertilizer Supply Squeeze: Middle East disruptions have tightened fertilizer supply chains—especially sulfur and ammonia transiting Hormuz—pushing market-reflective, independently assessed prices for urea, DAP, sulfur, and ammonia back toward energy‑crisis highs and elevating feedstock and freight costs.

2. Nitrogen Logistics Vulnerability: Nitrogen is the most exposed nutrient to the conflict, with ammonia logistics the critical chokepoint; while up to ~6 million mt/year of alternative merchant ammonia could offset the ~3.7 million mt/year Arab Gulf shortfall, timing and trade‑flow shifts still raise nitrogen costs and volatility.

3. EU Nitrogen Retrenchment: EU nitrogen imports were front‑loaded ahead of CBAM’s definitive phase (July–Dec 2025 imports +670k mt N vs six‑year average) and fell ~60% year over year in Q1 2026, with CBAM costs, Russia/Belarus tariffs, and Middle East risks likely to constrain near‑term buying.

4. Wheat Balances Resilience: Global wheat balances remain comfortable among major exporters despite lower plantings, keeping base‑case prices near current levels (CBOT ~590c/bu, Euronext ~€201/mt) while an oil‑price shock scenario tied to deeper Hormuz disruption lifts wheat benchmarks modestly, with weather and freight/dollar strength key swing factors.

5. Downstream Cost Transmission: Input‑cost transmission is uneven downstream: EU dairy and poultry are most sensitive via feed and fertilizer, dairy exports are most exposed to Middle East demand, and protein prices are diverging (EU dairy up, beef easing, chicken stable, pork recovering), reinforcing the need to align procurement and hedging with real‑time insight and long‑term outlooks to make superior decisions with confidence.

Key Quote

“Fertilizers are essentially the food of our food—when supply is disrupted, the impact eventually shows up in farm economics, in food inflation, and in rising policy pressure around food security.”

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Webinar

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FAQs: Navigating Shockwaves in Agriculture

Frequently Asked Questions

Navigating Shockwaves in Agriculture

Fertilizers: Supply, Pricing, and Risk Channels

Why does the Middle East conflict matter for global fertilizer markets?

The Middle East is a core exporter of fertilizers and key feedstocks. In 2025 it supplied nearly half of global sulfur exports, over one‑third of urea, and about one‑quarter of DAP and ammonia. Disruptions to production and transit—especially through the Strait of Hormuz—tighten availability, raise costs, and add uncertainty that ultimately feeds into farm economics, crop yields, and food inflation.

Which fertilizer nutrients are most exposed to Middle East disruptions?

Nitrogen is most exposed because ammonia and urea move in large volumes through Hormuz. Phosphates face risk via sulfur and ammonia inputs and some Middle East DAP supply, though other regions can partly backfill at higher cost. Potash exposure is limited because the Middle East is not a dominant exporter.

How have sulfur markets been affected and why does that matter for phosphates?

Sulfur prices spiked to record highs around $700/mt after attacks disrupted Middle East supply. The region accounts for roughly one‑third of global sulfur production, much of it tied to sour‑crude refining. Sulfur and sulfuric acid are essential inputs for phosphate fertilizers, so tighter sulfur supply has raised phosphate production costs and tightened availability.

What factors are constraining sulfur and sulfuric acid availability to Europe?

Europe relies on imports and refinery recovery. Constraints include Middle East refinery outages, Russia’s sulfur export ban, Europe’s shift from net exporter to net importer, and China’s restrictions on sulfuric acid exports (May–December), which reduce alternative supply and lift trade competition and costs.

Could global ammonia supply offset a prolonged Hormuz disruption?

On paper, yes. Potential incremental merchant ammonia volumes—such as new US Gulf capacity, resumption in Trinidad and Tobago, and possible Chinese exports—could total about 6 million mt/year versus roughly 3.7 million mt/year typically shipped from the Arab Gulf. However, timing and logistics matter: delays or reroutes can still reprice nitrogen, shift trade patterns, and raise costs for ammonia‑dependent producers.

How have EU nitrogen fertilizer imports evolved around CBAM and sanctions?

EU nitrogen imports were heavily front‑loaded in H2‑2025 ahead of the definitive CBAM phase (starting January 1), then dropped to about 0.5 million mt of nitrogen in Q1‑2026—roughly 60% below the six‑year average. Additional headwinds include CBAM‑related costs, extra tariffs on Russia and Belarus, Russian export quotas, and Middle East disruptions.

What does fertilizer affordability look like for farmers?

Affordability compares fertilizer prices to crop prices. Recently, urea (nitrogen) affordability deteriorated the most: energy, sulfur, and geopolitical risk pushed nitrogen costs up faster than crop prices, squeezing margins and prompting delayed purchases or lower application rates. Phosphates have been relatively less unaffordable; potash has remained comparatively stable.

Is phosphate rock supply directly hit by the conflict?

Direct impact is limited. Key exporters like Morocco continue to supply, and Saudi Arabia’s phosphate rock is largely used domestically for integrated production rather than exported via Hormuz. The larger pressure on phosphates stems from sulfur availability and costs rather than rock flows.

Can Saudi Arabia reroute fertilizer exports via the Red Sea?

For solids (e.g., urea, MAP/DAP), road transfers to Red Sea ports are feasible but slower and costlier; some MAP volumes have already moved this way. For ammonia, rerouting would require new pipelines and dedicated terminals, implying significant lead time and investment.

Grains and Oilseeds: Prices, Stocks, and Exposure

How have grain and oilseed prices reacted compared with the 2021–2022 shock?

Over the past 12 months, benchmark prices for wheat, corn, soybeans, and Indian rice have moved within roughly ±10%, far less than the sharp spikes seen after the Russia‑Ukraine war. Current market conditions reflect more balanced stocks, different shock transmission, and a weaker price response than in 2021–2022.

What is the current global wheat balance and why does it matter?

Global wheat stocks are assessed as comfortable into next season despite slightly lower production in the US, EU, Russia, Ukraine, and Australia. Major exporter stocks are near a 10‑year high, providing a buffer. Feed substitution favors corn over wheat, tempering wheat demand in rations. However, stocks are unevenly distributed: APAC’s stocks‑to‑use is low (sustaining import demand), while MENA looks tighter but some countries expect strong domestic harvests that reduce imports.

How does the Middle East’s role in grain trade influence risk transmission?

The Middle East is a large wheat‑importing region and typically holds higher stocks because of dry conditions. This buffers immediate shortages. Its direct price‑setting power for global wheat is smaller than the Black Sea’s, which helps explain a milder price response versus 2022.

How do fertilizers feed through to crop production costs by commodity and region?

Fertilizer intensity varies: corn is generally more fertilizer‑intensive than wheat; soybeans are less intensive but still face high delivered fertilizer costs in Brazil due to logistics. Brazil’s soybean producers are exposed because the country imports much of its fertilizer; higher input costs can raise soybean (and soymeal) prices, impacting global protein feed costs.

What are the key wheat price scenarios under different oil market paths?

Base case: Hormuz flows remain low through April with gradual recovery from May; WTI peaks near $102/bbl in April, trending to $67–$70 by December. Under this path, CBOT wheat averages around $5.90/bu in 2025–26; Euronext wheat near €201/mt this season and €199/mt next. Oil‑shock case: deeper Hormuz disruption; WTI peaks near $180/bbl in May before easing to ~$90–$93 by December. CBOT wheat rises to ~$6.45/bu this season (+$0.55 vs base); Euronext up ~€18/mt this season. Differences narrow next season as oil normalizes.

What near‑term risks could shift wheat prices from baseline?

Downside: improved Northern Hemisphere weather, cheaper corn, strong US dollar, and higher freight rates that curb import demand. Upside: weather damage to winter crops (e.g., US), higher energy and corn prices, and an extended Middle East conflict.

Regional Implications and Trade Flows

Which destination markets are most exposed to Middle East fertilizer flows?

India, Brazil, the US, and Australia are the most exposed to Middle East fertilizer shipments. Europe is less directly exposed to Middle East volumes for some inputs but still feels the knock‑on effects via sulfur, ammonia, energy costs, and global pricing.

How are Australia’s planting decisions changing with higher fertilizer costs?

Australia imports a large share of its fertilizers, much of it via Hormuz. With costs elevated, farmers are shifting acreage from more fertilizer‑intensive wheat into canola, barley, and pulses. Where nitrogen applications fall, yields and quality can be affected.

What is the outlook for West Africa given higher NPK and urea prices?

Higher prices risk demand destruction and lower application rates. Local capacity helps: in Nigeria, new urea capacity (about 1.3 million mt/year) can support regional availability. Outcomes will depend on affordability, logistics, and policy support; lower application could weigh on yields if price relief or supply improvements lag.

Can rerouting mitigate Middle East transit disruptions for fertilizers and grains?

Some rerouting is viable but costlier and slower. For fertilizers, solid products can be trucked to alternative ports; ammonia is far harder to reroute without new infrastructure. For grains, diversified origins and higher importer stocks (notably in the Middle East) reduce immediate shock, but freight and insurance costs can still rise.

Proteins: Costs, Demand, and Prices

How do fertilizer and feed costs affect EU protein producers?

Input exposure varies by species and country. Dairy farms are more fertilizer‑intensive than beef grazing operations and spend a larger share on feed (~40% of revenue) and fertilizer (~5%). Small increases in feed costs typically have a bigger margin impact than large fertilizer moves. Farmers can adjust feed and fertilizer use to protect margins, which affects output.

Which EU protein sectors are most exposed to Middle East demand?

Dairy is most exposed—about 10% of EU dairy exports go to the Middle East. Chicken and beef have moderate exposure (roughly 2–4%), while pork has minimal exposure. Globally, the Middle East is a major buyer of dairy, beef, and poultry, so exporters like Brazil are actively securing access routes.

How have EU protein prices responded since the conflict began?

Responses are mixed and influenced by broader market factors: beef prices, elevated for months, softened as premium demand cooled; chicken prices in the EU remained relatively stable, while Middle East chicken breast assessments spiked then eased as ports reopened; pork prices ticked up from a prior downtrend amid disease issues in Spain and changing China tariffs; dairy prices rose the most due to higher Middle East demand exposure, then leveled off as buyers secured supply.

What should protein producers monitor going forward?

Watch fertilizer and feed price paths, freight and diesel costs, trade policy shifts, and demand signals from the Middle East and Asia. If elevated input costs persist, production adjustments—such as reduced feed intensity or lower fertilizer use—could tighten supply and keep prices volatile.

Decision Support: Practical Actions and How We Help

What near‑term actions can buyers and producers take to manage risk?

• Stress‑test budgets using both base and oil‑shock price scenarios for fertilizers, freight, and key crops. • Diversify suppliers and routing options where feasible; pre‑position critical inputs ahead of tight windows. • Monitor sulfur and ammonia markets closely if exposed to phosphates or nitrogen. • Calibrate application rates to agronomic response and affordability to protect margins without compromising long‑term soil health. • Align sales strategies with destination‑specific demand risks, especially in the Middle East and APAC.

How does S&P Global Energy intelligence support confident decisions across the value chain?

We provide trusted intelligence across the full value chain—market‑reflective, independently assessed fertilizer and commodity pricing (Platts), and analyst‑led outlooks on crops, proteins, and trade flows (CERA). Our integrated, impartial view links real‑time insight with long‑term outlooks, explaining transparent methodologies so you can rely on the signals. Data and tools are delivered where you need them, supporting workflows from procurement and risk management to strategy. The goal is simple: empower superior decisions with confidence through objective, market‑reflective intelligence.

Blog: Fertilizer Market Risk and Response Amid Middle East Disruptions: Implications for Crops, Proteins, and Procurement

Introduction Global agriculture is navigating new shocks that elevate input risk, compress farm margins, and complicate procurement. Ongoing Middle East tensions are amplifying volatility across nitrogen, phosphates, and sulfur, with exposure to the Strait of Hormuz adding cost and timing uncertainty. An integrated, impartial view—linking real-time pricing to analyst‑led outlooks—is essential to make superior decisions with confidence. Our role is to deliver trusted, independent, market‑reflective intelligence that clarifies how supply disruptions, energy costs, carbon policy, and shifting trade flows affect fertilizer affordability, crop price formation, and food security, particularly in import‑reliant regions.

Fertilizer Market Risks and Actions Amid Middle East Disruptions Fertilizers remain central to crop economics, with nitrogen carrying the highest exposure to Middle East logistics and energy. The region accounts for a large share of global urea, ammonia, DAP, and sulfur exports. Any persistent disruption to flows or processing capacity quickly tightens supply and builds risk premia.

Sulfur is the current pressure point. Constrained Hormuz transits, regional refinery outages, and force majeure decisions have lifted spot sulfur assessments to records, inflated sulfuric acid costs, and squeezed phosphate production margins.
Potash is less directly exposed to Middle East risks, but the broader cost stack—energy, ammonia, sulfur, and carbon—has raised marginal production costs across nutrients.
Expect higher delivered prices, longer lead times, and wider origin‑destination basis as trade routes and sourcing rebalance.

Mitigation is possible, with feasibility varying by product and location: - Incremental merchant ammonia from the US Gulf Coast, Trinidad and Tobago, and potentially China could offset an Arab Gulf shortfall, subject to timing, policy, and price signals. - Europe illustrates operational friction. After front‑loading nitrogen imports in late 2025 ahead of the definitive CBAM phase, Q1 2026 arrivals fell below norms. Added compliance, tariffs on Russia and Belarus, and heightened geopolitical risk premiums complicate procurement. - China’s limits on sulfuric acid exports and Russia’s prior sulfur ban constrained alternative feedstock options for phosphates.

Procurement implications: - Diversify origin exposure and book logistics early. - Align contracting windows with policy milestones (CBAM, export restrictions) to avoid compressed buying periods. - Use market‑reflective, independently assessed pricing to benchmark contracts and stress‑test exposure.

Transmission to Crops and Farm Margins Price transmission from fertilizers to crops has been contained so far. Over the past year, benchmark wheat, corn, rice, and soy prices held within roughly a 10% band, avoiding the dislocation seen after the 2022 invasion of Ukraine. Contributing factors include: - Adequate aggregate wheat stocks among key exporters (US, EU, Russia, Canada, Australia, Argentina), despite localized reductions in plantings. - Feed demand that favors competitively priced corn, limiting wheat’s pull into rations. - Outside China, tighter stocks‑to‑use ratios are offset by subdued import demand, tempering price sensitivity.

However, affordability pressures are rising where nitrogen costs outpace crop revenues. This can defer purchases or reduce application rates, with potential yield effects into 2026–2027 if elevated input costs persist. Exposure is highest in markets reliant on Middle Eastern fertilizer and feedstocks (India, Brazil, US, Australia). Europe is less dependent on Middle East supply but faces higher policy‑driven costs and compliance burdens.

Immediate actions to support confident, informed decisions: - Integrate input risk, logistics reliability, and policy costs into planning scenarios and budgets. - Producers: lock in nitrogen when basis and freight are favorable; use staged coverage to manage timing risks linked to Hormuz transits, refinery run rates, and Chinese export policy. - Protein and downstream buyers: track soybean‑meal and corn spreads versus urea and ammonia costs to anticipate ration shifts and margin compression. - Wheat risk managers: monitor exporter stock distribution and weather‑driven revisions in Australia, the Black Sea, and North America; regional tightness can emerge despite comfortable global stocks. - Across workflows: pair real‑time insight with long‑term outlooks on supply additions, refinery sulfur recovery, carbon costs, and trade restrictions.

Energy and Logistics Shape Grain and Protein Outlook Energy scenarios and logistics will steer grain and protein pricing over the next two to three quarters.

Base case: - Hormuz congestion persists through April, with gradual improvement from May. - Crude prices peak in April and ease into year‑end. - Benchmark grain prices track near current levels, with localized volatility where logistics remain constrained.

Crude price shock case: - Deeper Hormuz disruption drives a higher oil peak in May before convergence toward the base case by year‑end. - Grain impacts are asymmetric: current‑season wheat prices rise more than next‑season values, signaling near‑term supply risk while the forward curve stays anchored.

Key risks: - Downside: improved US weather, a stronger US dollar, and elevated freight curbing import demand. - Upside: sustained energy strength, tighter input availability, and weather‑driven yield variability across the Northern Hemisphere.

Fertilizer remains the primary transmission channel from energy to crops—and from crops to proteins. Effects vary by crop and region: - Australia’s reliance on Middle East supply via Hormuz is pushing rotations away from nitrogen‑intensive wheat toward canola, barley, and pulses, implying smaller wheat area and potential yield effects. - In Europe, growers are shifting out of corn toward less nitrogen‑intensive soybeans and sunflower in southern regions; reduced application rates would add yield risk for corn. - Localized supply additions (e.g., new urea in West Africa) can support regional availability, but ammonia rerouting is infrastructure‑constrained.

Why independent, market‑reflective pricing matters: - Transparent, trusted benchmarks enable clear comparisons across origins, freight routes, and products. - Analyst‑led perspectives link real‑time signals to long‑term capacity, carbon, and policy trajectories, helping anticipate turning points.

Protein Market Dynamics Protein markets are absorbing input shocks with varied sensitivity by species and production system: - Dairy is more exposed to feed and nutrient costs than grazing‑focused beef. On typical EU dairy farms, feed is roughly 40% of costs relative to revenue and fertilizer about 5%, so modest feed inflation can outweigh larger fertilizer moves in margin impact. - Producers can adjust feed rates and fertilizer applications to protect margins, accepting some output risk.

Trade and demand exposure to Middle East markets differs: - EU dairy has higher export linkage than pork; chicken and beef sit between. - As selective port access improves, destination‑market price spikes are easing, but volatility will persist as buyers rebalance supply chains.

Recent price behavior aligns with these cost and trade dynamics: - EU beef eased from late‑2024 highs as uncertainty weighed on premium demand. - EU chicken held steadier given limited Middle East exposure; Middle East chicken benchmarks spiked on coverage buying and then moderated as routes improved. - Pork rebounded from earlier declines due to disease events in key producers and changes in China trade. - Dairy firmed with coverage buying tied to Middle East demand, then leveled as flows adjusted.

Forward view: - Sustained energy strength or renewed logistics disruption would keep upward pressure on feed and processing costs. - Broad‑based easing in oil and freight would relieve margins and stabilize price formation.

How Trusted Intelligence Enables Superior Decisions Our purpose is to empower superior decisions through comprehensive, trusted intelligence across fertilizers, feedstocks, crops, and logistics. We connect real‑time insights to long‑term outlooks so procurement, risk, and commercial teams can: - Benchmark contracts with market‑reflective, independently assessed pricing grounded in transparent methodologies. - Interpret cross‑commodity signals—energy, freight, crop inputs, weather—and translate them into clear coverage, sourcing, and hedging strategies. - Link near‑term events to structural trends in capacity additions, refinery sulfur recovery, carbon costs, and policy regimes. - Access intelligence seamlessly—delivered how and where teams need it to support workflows across the full value chain.

Practical priorities: - Margin management and procurement agility: calibrate feed and fertilizer strategies by species and region, reassess crop rotations to balance yield and input intensity, and diversify route and supplier exposure. - Scenario tracking: align oil and freight scenarios with realized logistics conditions to gauge fertilizer affordability, planting decisions, and protein availability. - Stress testing: use independent benchmarks to quantify exposure and validate timing for staged coverage.

Conclusion Volatility across energy, logistics, and fertilizers will continue to shape grains and proteins unevenly by region and product. Organizations that ground decisions in market‑reflective, independently assessed pricing and transparent methodologies can anticipate turning points, protect margins, and sustain supply. With an integrated, impartial view of global energy and agricultural markets—connecting real‑time insight to long‑term outlooks—you can make superior decisions with confidence through change and uncertainty.