The Strait of Hormuz Is Technically Still Open. So Why Are Fertilizer Prices Climbing?

Just days after President Donald Trump declared the ceasefire between the U.S. and Iran was over, a new debate has emerged over one of the world’s most critical shipping lanes.

Trump insists the Strait of Hormuz remains open. Iran says it’s closed. The reality appears to be somewhere in between.

While ships are still moving through the narrow waterway connecting the Persian Gulf to the Gulf of Oman, traffic has slowed dramatically, and the vessels that are making the journey are increasingly doing so with their tracking systems turned off to reduce the risk of becoming targets.

According to shipping data, just six commercial vessels transited the Strait of Hormuz on Sunday, which is the fewest in five weeks. Reports also indicate every one of those ships traveled “dark,” with their Automatic Identification System (AIS) turned off.

For agriculture, the distinction between “open” and “closed” may be less important than what is actually happening.

“It’s basically shut down,” says Josh Linville, vice president of fertilizer at StoneX. “We saw a lot of vessels leave. We’ve not seen nearly as many vessels go back in, and that’s really what we need at the end of the day.”

Roughly one-fifth of the world’s oil supply and a significant share of global fertilizer exports move through the Strait of Hormuz. Any disruption quickly ripples through energy, freight and fertilizer markets.

The Missing Piece: Empty Ships Aren’t Returning

Linville says the fertilizer market isn’t simply watching whether loaded ships can leave the Persian Gulf. The bigger concern is whether ship owners are willing to send empty vessels back into the region.

“What we’ve seen are vessels willing to leave the Persian Gulf and chance the strait to get out of that body of water,” he says. “However, what we don’t see, and this is what we need next, we need empty vessels willing to go back into that body of water. We need empty vessels saying, ‘Yes, I’m willing to go into the Persian Gulf, get loaded and get back out again.’”

Without those returning vessels, fertilizer exports eventually slow regardless of whether the strait is technically open.

“I can’t blame them. If you go into that body of water, you might get stuck there for several months if this fighting picks up again,” Linville adds.

Fertilizer Prices Are Already Responding

The uncertainty has already reversed what had been a significant decline in nitrogen prices. Linville points to urea as the best gauge for the fertilizer market.

Earlier this spring, New Orleans urea barges traded as high as $782 per ton. Prices eventually collapsed to $340 per ton, offering hope that fertilizer costs would continue easing ahead of fall application. That trend, though, has already reversed.

“This morning, prices are back up about $400,” Linville says. “The Strait of Hormuz, unfortunately, is causing more turmoil, causing more panic.”

While farmers who use anhydrous ammonia or UAN may not purchase urea directly, Linville says all nitrogen fertilizers remain connected.

“If the price of urea starts to skyrocket, more demand is going to flow to anhydrous,” he says. “Guess what that does to the price? It boosts that price. Same thing for UAN. They all have their own supply-and-demand fundamentals, but they’re still linked because farmers can switch between products.”

Fall Supply Is Better Than It Was, But Risks Are Growing

When the ceasefire was announced earlier this summer, hundreds of thousands of tons of fertilizer that had been stranded aboard vessels were finally able to leave the region. That helped improve near-term supplies.

However, Linville warns the industry is now beginning to lose something else, and that’s time.

“We had help. A lot of those tons that were sitting already on vessels got out. But unfortunately, if this thing continues, we’re doing more damage to 2027,” says Linville.

The timing is particularly concerning because summer is typically the fertilizer market’s seasonal lull, when global demand softens and prices often retreat before fall buying begins.

“The longer this goes on, the more downside that we’d see with prices,” says Linville.

Farmers Feel the Pinch

Just when farmers think they’ll see some relief with fertilizer in time for fall, the opposite seems true. And to make it worse, the latest price swings come as grain prices remain under pressure, leaving many growers struggling to pencil out profits.

“I get the frustration. The farmer is basically being told you’re going to raise a crop, but at best you’re going to break even, and more likely you’re going to lose money,” says Linville.

Despite the recent rebound, summer fill prices for anhydrous ammonia and UAN remain below the spring highs, giving retailers an opportunity to restock. But Linville cautions that continued instability in the Strait of Hormuz could quickly change that outlook.

Summer Fill Prices Still Below Spring Highs...For Now

The fertilizer market is currently in summer fill season, when retailers replenish supplies ahead of fall application. Linville says today’s fill prices remain below the record highs farmers faced this spring, creating an opportunity for retailers to lock in product.

“When you look at UAN fill, anhydrous fill and fall prepaid numbers, they’re better than the highs that we had seen in the spring,” Linville says. “The expectation was, yeah, go ahead and jump on that.”

Still, he cautions that prices remain historically strong. UAN values are running slightly below last year’s levels, while anhydrous ammonia remains more expensive.

The renewed uncertainty surrounding the Strait of Hormuz could quickly change the outlook. So, could the the latest conflict could push summer fill prices higher? Linville says, “Absolutely.”

Even growers who don’t apply urea aren’t insulated from rising urea prices, he explains.

“If the price of urea starts to skyrocket, more and more demand is going to flow to anhydrous,” Linville says. “Guess what that does to the price? That boosts that price. Same thing for UAN.”

While each nitrogen fertilizer has its own supply-and-demand fundamentals, Linville says the markets are closely connected because many farmers can switch between products. As a result, a sharp increase in one nitrogen fertilizer often pulls the others higher as well.

More Than Just the Strait

The Middle East isn’t the fertilizer market’s only challenge. Linville notes China continues limiting phosphate exports while maintaining uncertainty around urea shipments through changing export policies. European nitrogen production also remains below normal, adding additional pressure to global supplies.

Still, he says the Strait of Hormuz remains the single biggest driver for nitrogen prices today, and an even bigger factor for phosphate fertilizers.

“If you were to try to come up with a worst-case scenario, we’re in it today,” Linville says. “It would be very difficult to come up with much more that could be going wrong with global production, global exports, logistical costs and the grain market.”

Long-Term Solutions Needed

Rather than relying on short-term fixes every time global conflict erupts, Linville believes the U.S. needs to focus on strengthening domestic fertilizer production.

“We need to quit thinking about Band-Aids on these gaping wounds,” he says. “We need more nitrogen production here at home, better relationships with phosphate-exporting countries and to start thinking longer term so we quit having these cycles happen.”

For now, the Strait of Hormuz remains neither fully open nor completely closed. Ships are still moving, but not normally. And for farmers watching fertilizer markets, that uncertainty may be enough to elevate prices as farmers head into the fall.

Tensions are also rising in the Black Sea region. Michelle Rook looks into the impact that’s having on the wheat market.