Four Months After the Strait of Hormuz Closure: Fertilizer Market Adjustment and a Revised Outlook

➩ Urea prices retraced the April spike more quickly than expected. NOLA urea peaked near $710/st in April and fell to $386 by mid-June, below the pre-war level of $470. The decline appears to have reflected several reinforcing developments: a reduced probability of a prolonged closure, China’s re-entry into the export market with a roughly 2 MMT quota, rerouting through Omani ports, greater-than-expected availability of non-Gulf supply, and some demand-side adjustment through delayed purchases or substitution into ammonium sulfate.

➩ Phosphate and ammonia appear to remain constrained by factors outside the immediate Strait reopening. DAP held near $785, 26 percent above pre-war, while MAP held near $783. For phosphate, sulfur availability remains a central constraint, with sulfur prices still up 32 percent, and China’s phosphate export restrictions add another source of tightness. Ammonia remained near $775, consistent with the continued influence of European gas costs. These constraints are not directly resolved by a reopening framework, suggesting a more gradual adjustment than in urea.

➩ Seasonal demand could still support urea prices in the second half of the year. Brazil’s second-half import season and India’s monsoon-linked buying window are entering their peak periods. Historically, roughly 60 percent of Brazil’s urea imports arrive from August through December. Because some nitrogen demand appears to have been deferred, substituted, or only partially covered rather than permanently eliminated, the back half of the year may provide some support to urea prices, particularly if nominated cargoes are delayed or fail to convert.

➩ The revised outlook is lower than the April scenarios but not uniformly bearish from the mid-June trough. The central-case 2027 averages are $496 for urea, $666 for DAP, $660 for MAP, $619 for ammonia, and $361 for UAN. These projections are below the April scenario results, but they suggest the possibility of some firming from the mid-June urea low rather than continued weakness. The largest modeled uncertainty remains in urea, where the Smooth-to-Deadlock range is $72 in 2027.

➩ Reopening the Strait may not translate immediately into normalized fertilizer flows. Fertilizer bulk carriers are likely to move behind oil and LNG in the queue for mine clearance, insurance reinstatement, vessel prioritization, and backlog clearance. The extent of damage at Ras Laffan and South Pars also remains uncertain. These frictions suggest that effective capacity could normalize over months rather than weeks, even if headline transit counts recover earlier.

Recommended Citation: Wang, M., Chakravorty, R., Arita, S., and Steinbach, S. (2026). Four Months After the Strait of Hormuz Closure: Fertilizer Market Adjustment and a Revised Outlook. ARPC White Paper 2026–09. Agricultural Risk Policy Center, North Dakota State University. July 1, 2026.
https://doi.org/10.22004/ag.econ.404235