Reopening Hormuz May be Too Little Too Late to Safe Guard the Growing Season

The Middle East conflict has led to a first-of-its-kind impact on fertilizer markets: a critical exacerbation on already constrained supplies just ahead of the Northern Hemisphere’s planting and growing season. Josh Linville, Vice President on Fertilizer at StoneX joined CNBC to discuss what the trouble in the Strait means for global planting and issues for Asian giants like China and India.  

Key Takeaways:  

• Fertilizer supplies are severely hampered by the US-Iran conflict that closed traffic in the Strait of Hormuz 
• Asia and Australia are among some of the most at-risk economies from the curbs on the critical commodities 
• There is not an easy solution for this conflict’s economic impact as it comes an already strained market at the “absolute worst time” 

There is More at Risk for the Strait of Hormuz than Oil Supply 

While much of the world’s attention during the breakout of war in the Middle East and subsequent closure of the Strait of Hormuz went to energy supplies and prices, there may be an even more significant human consequence to the military actions.  

Already an issue before the conflict, food security may be at even greater threat moving forward as supply constraints on critical fertilizer are exacerbated at one of the worst times of the year – the start of the planting season.  

StoneX Vice President of Fertilizer, Josh Linville, joined CNBC to reflect on the seriousness of the situation as demand for products critical for crop yields have been frozen in the Persian Gulf as the US and Iran have traded missiles in the critical shipping lane.  

According to Linville, Persian Gulf producers represent “three of the world’s top ten urea...markets, …one of the top five global exporters of…phosphate, and half of the world’s tradable sulfur supply.” 

An Impact on Major Asian Economies 

While the restriction on fertilizer has had – and will have – an impact on global food supplies, the conversation highlighted some of the more distinctly at-risk regions and countries given current circumstances.  

Linville warned that some facing the worst impact from the fertilizer shortages included Eastern Europe, Australia and Asia given they are a “little behind” the West. He would highlight that India’s face of confidence for being prepared was undermined by a large order for urea following a delivery troubled purchase made a few months ago. 

What Can Be Done? 

Given the concern around crop yields and food security, Linville was asked what could be done to mitigate or supplement the pressures in fertilizer. His assessment was not encouraging. He said the conflict has “done six weeks of damage at the absolute worst time of the calendar [year].”  

Linville said that vessels needs to start moving through the Strait again, but insinuated it may not be enough. He said that 930,000 tons were ready to ship before closures, but that would not be enough to meet global demand. And, returning to full production and shipping still looks unclear.  

Make Fertilizer Insights Your Competitive Advantage 

Fertilizers are essential inputs for agricultural production, often representing the largest cost for farmers. Gain insights into the NPK fertilizer market with StoneX's professional reports, covering the latest trends, prices, and underlying market factors.  

Sign up for a Market Intelligence Fertilizer subscription trial for free here. 

Watch the Original Conversation on CNBC Here.

--- Written by: John Kicklighter, Global Head of Content 

--- Expert: Josh Linville, StoneX VP of Fertilizer