The situation in Iran has had a significant impact on the global nitrogen fertilizer market. According to the weekly report of global financial services company StoneX, the region is home to important industry participants such as Iran and Egypt, and recent developments have increased concerns about the supply of these strategic inputs.
According to Tom á s Pern í as, an analyst at StoneX Market Intelligence, although there have been no reports of direct damage to fertilizer production infrastructure in relevant countries, the indirect impact is already evident. On Friday (June 13th), news of the conflict pushed up urea futures prices in the United States, the Middle East, and Brazil, reflecting the market's belief that the event represents a bullish factor, "he said. In the observed development of the situation, Israel has reduced the natural gas production of important hubs, which directly affects Egypt, which uses these inputs to manufacture fertilizers. As a result, urea production in Egypt was interrupted. In Iran, geopolitical uncertainty has also led to a decrease in nitrogen production. Given the unstable situation, some suppliers have chosen to withdraw their quotes from the market until the impact of the conflict on supply and demand becomes clearer, "Pern í as added. Conflict also puts pressure on freight and cargo insurance. Another factor to be aware of is the rise in oil prices, which has been occurring since the escalation of tensions. If this rise continues, it may increase the cost of sea and road freight. This adds another pressure on import costs, "the analyst explained. He added that this situation deserves special attention from Brazil, as Brazil heavily relies on nitrogen fertilizer imports. With the harvest of soybeans and preparations for the second season of crops, a period of high demand for fertilizers is approaching, and fluctuations in international prices may directly affect the country's agricultural production costs." Although the impact on Brazilian urea prices is not yet fully determined, it is now unfavorable for buyers, especially those who have not yet purchased, "Pern í as concluded. The fertilizer market in Brazil is on alert, with approximately 17% of Brazil's urea imports coming from Iran. Agrinvest's market intelligence analyst Jeferson Souza emphasized that Iran produces approximately 9 million tons of urea annually, with export volumes ranging from 4.5 million to 5.5 million tons. This makes it a major participant in the fertilizer trade in the region.
For Brazil, conflicts of this nature - especially those involving these key players - always raise concerns, especially for farmers, "the analyst said. Generally speaking, Brazilian farmers rely on the international market to meet over 80% of their fertilizer needs. Specifically for urea, the dependence is even greater. According to Souza, 100% of the urea consumed in Brazil in the past year was imported. Therefore, any such developments in the Middle East will directly affect the production costs of farmers, "he warned. This time of year is crucial for Brazilian farmers as they begin purchasing inputs for the upcoming summer planting season starting in September. In some cases, they even purchase fertilizers, crop protection products, and seeds in advance for the second harvest in 2026 (safrinha). In addition, the recent surge in international fertilizer prices - with no corresponding increase in agricultural product prices - has once again squeezed farmers' profit margins. According to Ita ú BBA's monthly agricultural comprehensive enterprise report, the price ratio of fertilizers to grains (a measure of how many bags of grain are needed to purchase one ton of fertilizers) has reached a level comparable to the peak of the Ukrainian war crisis in 2022.
