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THURSDAY, JULY 23, 2026   |   SPECIAL REPORT & ANALYSIS

MARKET PERSPECTIVE  |  WORLD FERTILIZER SUPPLY

The World’s Fertilizer Squeeze Closes In on Brazil and Asia’s Rice Bowl

With the Strait of Hormuz disrupted, Russia and China rationing exports and Brazilian farmers barely half-covered on nutrients, the 2026/27 planting season in the two regions that feed world grain and rice trade is now the market’s biggest supply-side risk.
 

Analysis  ·  July 23, 2026

The global fertilizer market has absorbed three shocks in five months — a shooting war astride the Strait of Hormuz, fresh export rationing by Russia and China, and a price spiral that has pushed benchmark urea above $850 a metric ton, more than double a year ago. The bill is now coming due where it matters most for world food supply: Brazil, which must fertilize a record soybean crop it starts planting in roughly 60 days, and South and Southeast Asia, where the May-August rice planting window that produces some 90% of globally traded rice varieties is being fertilized right now.

Brazil enters its buying window with only 40-45% of next crop’s fertilizer secured — against a typical pace well ahead of that by July — while Asian rice farmers face input costs up 50-80%. Fertilizer is where the Hormuz conflict stops being an energy story and becomes a food story.

A three-front supply shock

Front one: the Gulf. Roughly 30% of seaborne fertilizer trade transits the Strait of Hormuz, and the region accounts for about 36% of global urea exports, 29% of ammonia, 26% of DAP and nearly half of traded sulfur. Since the strikes on Iran began in late February, Iranian ammonia output has halted, Qatar has suspended urea, ammonia and sulfur production at times, and cargoes that do move are re-routed at sharply higher freight. The World Bank’s fertilizer price index jumped more than 12% in the first quarter alone — its sixth increase in seven quarters — and the bank now projects fertilizer prices up more than 30% for 2026, with urea up as much as 60%.

Front two: export rationing. Russia has capped fertilizer exports at 20 million tonnes for June-November 2026 — 8.7 million tonnes of nitrogen products, 4.2 million of ammonium nitrate and 7 million of complex fertilizers — extending a quota regime in place since 2021. China is restricting phosphate exports, with MAP export controls running through August; MAP has surged to about $720 a tonne, up 13% since January. Egypt continues to divert natural gas away from urea production seasonally, and a Ukrainian drone strike on the Smolensk nitrogen plant took additional Russian capacity offline.

Front three: demand-side panic. Import-dependent governments are hoarding, subsidizing and tendering aggressively. India — which buys roughly 20% of globally traded urea and sources about 40% of its fertilizer imports from the Gulf — has cut domestic output on LNG constraints even as its subsidy regime insulates farmers from the price signal, keeping demand strong. That combination of insulated demand and restricted supply is precisely what amplified the 2021-22 spiral.

Figure 1. The chokepoint and the customers: Gulf exporters (red) supply roughly a third of seaborne fertilizer trade; Russia, China and Egypt (gold) are rationing exports; Brazil and the Asian rice belt (blue) are the most exposed buyers. Sources: IFPRI, World Bank, farmdoc daily.

Table 1. Benchmark fertilizer prices, July 2026. Sources: World Bank Commodity Markets, Nation Thailand, DatamarNews.

Brazil: the most exposed big buyer

No major agricultural producer is more leveraged to imported nutrients than Brazil. The country consumed 49.1 million tonnes of fertilizer in 2025 and imported 45.5 million of it — 92%. Dependence runs 98% for potash, 93% for nitrogen and 57% for phosphate, and fertilizer represents 30-40% of Brazilian row-crop operating costs. Its buying calendar is uniquely badly timed for this crisis: about 70% of annual fertilizer imports land between April and September, feeding soybean planting that begins in October. The conflict erupted exactly when Brazilian farmers, mills and blenders normally book the bulk of their program.

The pace of coverage confirms the squeeze. Only about 40-45% of fertilizer needed for the 2026/27 season has been purchased, versus a typical pace comfortably ahead of that by mid-year; back in early April coverage was about 30% against a normal 40%. Fertilizer arrivals through Paranagua, the main import gateway for the southern grain belt, fell nearly 45% in January-April versus a year earlier. Farm economics are deteriorating in parallel: the soybean-to-MAP exchange ratio reached 76 bushels per ton in early April, at the top of its five-year range, and the corn-to-urea ratio is near a five-year peak. When crop-for-nutrient exchange ratios sit this high, farmers cut application rates — or acres.

Brazil is treating it as an emergency. A crisis committee under the presidential chief of staff is negotiating supplies with Russia, China and Morocco — the awkward reality being that Brazil’s five largest suppliers (China, Russia, Canada, Morocco and Egypt) covered 69% of 2025 imports, and three of the five are now restricting exports or disrupted. Russia alone supplies about a third of Brazil’s fertilizer imports, and Moscow’s new quota tightens exactly across Brazil’s buying window. Petrobras has approved a $1 billion revival of mothballed nitrogen plants that could cut urea import dependence from 88% toward 65% — but not before 2028-29, which does nothing for this crop. Meanwhile sulfur costs (up over 1,100% at the extreme) have forced Mosaic to shutter phosphate operations at Araxa and Patrocinio, reducing domestic capacity at the worst possible moment. The agriculture ministry classifies the outlook as extremely high risk for the 2026/27 harvest.

Figure 2. Brazil’s fertilizer lifelines, July 2026: Russian and Belarusian potash and urea under quota, Moroccan phosphates awaiting an environmental license, Gulf urea re-routed and costlier — while purchases for 2026/27 run at 40-45% of needs. Sources: DatamarNews, Rio Times, farmdoc daily.

Table 2. Brazil’s nutrient-by-nutrient exposure for the 2026/27 crop. Sources: DatamarNews, Rio Times, farmdoc daily.

Asia’s rice belt: costs meet the monsoon

Southeast and South Asia are exposed on a faster clock. The May-August planting of long-grain indica and jasmine varieties — roughly 90% of globally traded rice — is underway now, meaning nitrogen either goes on at these prices or does not go on at all. With Gulf producers supplying 30-35% of world urea and the benchmark at $857 a tonne in April (versus $726 in March), farmers from Punjab to the Mekong Delta face combined fertilizer, fuel and transport cost increases of 50-80%.

The country-level picture is uneven. Vietnam, the No. 2 rice exporter, is scaling back output as energy and input costs erode margins. The Philippines warns domestic rice production could drop 20-50% without intervention. Thailand and Bangladesh face similar margin pressure. Indonesia is comparatively buffered — its domestic urea industry is fielding new export demand, and Jakarta’s Perpres 113/2025 prioritizes domestic supply with a flexible export quota near 1.5 million tonnes — while Cambodia, Laos, Myanmar and Sri Lanka are flagged as acutely vulnerable import-dependent nations with little fiscal room to subsidize. India cushions its farmers through the Nutrient-Based Subsidy regime, but that shifts the stress to the budget and to global markets, since subsidized Indian demand does not retreat when prices rise. The International Rice Research Institute warns that continued shipping disruption is the more consequential medium-term risk to Asia’s agricultural cycle than the initial price spike.

Figure 3. Exposure across the rice belt: acutely vulnerable importers (dark navy), high-exposure producers (mid blue) and partly buffered countries (light blue). All planting-critical nitrogen for the May-August window is being bought at post-conflict prices. Sources: Nation Thailand, IFPRI.

Table 3. Rice-belt fertilizer exposure, 2026 main-season planting. Sources: Nation Thailand, IFPRI, Antara.

Policy could amplify the shock

IFPRI modeling puts numbers on the policy risk, and the asymmetry is striking: export restrictions move world prices far more than subsidies do. A modest tightening of export curbs adds about $29 a tonne to urea; a severe clampdown adds $134. Capping India’s subsidy outlays, by contrast, would shave only 1-2% off world urea prices. The flip side is the size of the prize from restraint — relaxing current export restrictions could return roughly 6.1 million tonnes of urea to world markets, more than enough to offset a large share of the Gulf shortfall. The signals to watch: China’s quota releases in the second half, whether Russia extends or tightens its quota in December, and India’s subsidy budget and import tenders.

Table 4. The export-restriction scoreboard. Source: IFPRI.

Market implications

For grain and oilseed markets, the transmission runs through acres and application rates. Brazilian soybeans are the least nitrogen-hungry major crop, so the first casualty of rationing is more likely the safrinha corn crop — heavily urea-dependent and planted January-March 2027 — than the soybean area itself. Watch for Brazilian farmers to mine soil nutrients for a season, trim potash and phosphate rates on soybeans, and shift marginal area toward less input-intensive crops. That is survivable for one cycle; agronomists note soil reserves buffer the first year, with yield damage compounding if the squeeze extends into a second season.

In rice, the risk is more immediate because the crop being fertilized now feeds 2026/27 export supply. Vietnam trimming output, the Philippines importing more, and thinly-buffered Cambodia, Myanmar and Sri Lanka cutting rates all point the same direction: tighter exportable rice supply into 2027 and upward pressure on Asian food inflation, with the poorest import-dependent countries in Africa — where fertilizer use already fell 25% after 2022 — squeezed out of the market first. The U.S. sits in a comparatively insulated position, with domestic nitrogen capacity, Canadian potash and most 2026 needs booked before the conflict, which sets up a competitiveness gap in 2027: U.S. corn versus Brazilian corn grown with $850 urea.

What it signals for U.S. farmers in 2027

The 2026 crop was relatively insulated; the 2027 crop is not. Most U.S. tonnage for this year’s crop was booked before the February strikes, and the U.S. carries structural cushions Brazil lacks — domestic nitrogen capacity running on comparatively cheap natural gas, Canadian potash, and only about 13% phosphate-rock import reliance. None of that timing luck extends to 2027: fall 2026 anhydrous and P&K applications and spring 2027 preplant will all be priced in the post-Hormuz world. Retail already shows it — anhydrous at $967 a ton is up 26% from a year ago, MAP up 13%, DAP up 12%. The National Corn Growers Association’s warning is blunt: farmer fertilizer risk intensifies in 2027, not 2026. 

The near-term tell is that six of eight retail products have drifted lower for six straight weeks in the post-season lull; that slide is the booking window for growers willing to lock fall and spring needs early.

By nutrient, the exposure sorts unevenly. Phosphate is the most stressed: China’s export controls, Mosaic idling Brazilian capacity and Brazil’s crisis buying all chase the same non-Chinese tons U.S. importers need, and DAP above $900 retail is historically the level where Corn Belt growers cut phosphate rates and mine soil tests. Nitrogen is the relative U.S. advantage — domestic ammonia on domestic gas — but retail N still keys off world urea, so it stays elevated as long as Gulf supply is disrupted. Potash is the calmest of the three (up just 3%), with Canada covering U.S. needs; the risks there are policy (tariff treatment of Canadian potash) and Brazil bidding aggressively for Canadian tons as a Russia substitute.

The offset: the same squeeze punishes the competition harder. Brazil’s safrinha corn — planted January-March 2027 with imported urea at world prices — is the most likely acreage and yield casualty, and thinner Brazilian corn and Asian rice supply into 2027 supports the prices U.S. corn and rice growers sell into. The 2027 setup for a U.S. grower is therefore higher input cost, partially offset by a firmer demand floor under corn — with the corn-versus-soybean acreage decision tilting toward soybeans at the margin if nitrogen and phosphate hold at these ratios, the familiar 2008 and 2022 pattern. The December Russian quota decision and China’s second-half phosphate releases will decide how much of today’s premium is still embedded in spring 2027 spot prices.

Table 5. U.S. average retail fertilizer prices, week of July 13-17, 2026. Source: DTN retail fertilizer survey.

Table 6. Illustrative N-P-K bill for a high-yield corn acre at July 2026 retail versus a year earlier (180-70-60 program; product analysis 82% N, 46% P2O5, 60% K2O). Spring 2027 spot exposure is additive if export quotas tighten. Sources: DTN price survey; author calculations.

Bottom line

Fertilizer is the slowest-moving but longest-lasting of the Hormuz conflict’s commodity shocks. Brazil’s 2026/27 crop can still be fully fertilized — but only if Russian quota volumes flow, Chinese phosphate ships, and Moroccan capacity comes through, and every one of those is a policy decision made in someone else’s capital. A Brazil that plants fewer or thinner-fed corn acres, and a rice belt that skimps on nitrogen this monsoon, would put a floor under world grain and rice prices well into 2027, analysts note. Watch Brazil’s purchase pace against its October planting start, Russia’s December quota decision and China’s second-half phosphate releases; those three numbers will tell you whether this stays an input-cost story or becomes a food-supply story.