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Vice President- Fertilizer
Eight months of disruption around the Strait of Hormuz have passed without any expansion of Persian Gulf port loading capacity. Hormuz fertilizer supply is therefore limited less by the strait itself than by how fast Gulf ports can load vessels once shipping resumes. Tonnage sitting in warehouses reaches nitrogen, phosphate and sulfur buyers only at the pace those ports allow.
Josh Linville, StoneX VP of Fertilizer, covers global fertilizer markets, from nitrogen and phosphate to North American and global crop input dynamics. That coverage gives insight into how Persian Gulf port capacity, shipping through the Strait of Hormuz and buyer behavior are driving fertilizer supply and prices.
Persian Gulf port facilities, rather than the Strait of Hormuz itself, set the ceiling on how quickly fertilizer supply returns to global markets. Reopening the strait removes one barrier, but each port still loads vessels at a fixed pace. Specifically, fertilizer held in warehouses and vessels waiting in the Persian Gulf add nothing to supply until they clear that loading step. "That choke point is going to be the port facilities. The port facilities are going to be the thing that holds all the supply back," Linville says.
Port loading capacity across the Persian Gulf has not grown during eight months of disruption, so the backlog falls on the same infrastructure that existed before. According to Linville, "We haven't done anything in the last eight months to increase our port loading capabilities." Port crews work to load vessels and catch up, but that work does not happen overnight. As a result, fertilizer supply recovery follows loading throughput rather than the headline of a reopened strait.
Nitrogen, phosphate and sulfur prices are exposed to a sharp selloff when shipping through the Strait of Hormuz resumes, because sellers rush to move product into a market with few active buyers. The selloff reflects market structure as much as physical supply. Linville notes that "it is a market that is dominated by sellers and few to no buyers. Prices fall in that situation." Conversely, buyers return once the initial move overshoots and port limits show that supply cannot arrive all at once. Prices then recover part of the drop without returning to the levels seen during the disruption.
Fertilizer supply normalization after a Hormuz reopening depends on three things recovering together, namely port throughput, vessel traffic through the strait and buyer confidence that a peace deal is holding. Supplies return to the marketplace only as each of those pieces falls into place. Linville frames the recovery in terms of "months rather than days or weeks", a gap that matters for anyone planning fertilizer purchases.
"I think it's still going to be painful," Linville adds, "Maybe not nearly as painful as it is now, but it is going to hurt." Northern Hemisphere farmers and retailers face that slow fertilizer supply recovery during the spring season. Lower pressure than at the height of the disruption still leaves fertilizer costs elevated for growers in Europe and North America. The pace of Persian Gulf loading shapes how long that pressure lasts.
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: Josh Linville, StoneX VP of Fertilizer
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