Recent weeks have seen fertiliser markets move from the shock caused by tensions around the Strait of Hormuz into a fragile supply recovery. Following a ceasefire agreement between the US and Iran, RaboResearch senior grains and oilseeds analyst Vitor Pistoia said, ships resumed departures from the Persian Gulf and delayed cargoes gradually cleared the region. “Around 1.0 million tonnes of urea and 0.7 million tonnes of sulphur had initially been stranded. While the reopening of Hormuz has eased immediate concerns, trade has not fully normalised,” he said. “The shipping sector remains cautious, freight and insurance costs are elevated, and naval mines continue to disrupt shipping in the region. As a result, physical markets are expected to remain tight in the near term.”

Mr Pistoia said nitrogen markets have experienced the sharpest correction. “During the recent price spike, many importers and farmers delayed purchases because fertiliser became too expensive. At the same time, Chinese exports increased and Gulf supplies returned, adding pressure to the market. Urea prices have since fallen sharply and are approaching more affordable levels for buyers.”

With the military conflict in the region over – for now – market direction is increasingly being driven by demand rather than supply shortages, Mr Pistoia said. “Prices could ease further as buyers remain cautious and more ammonia becomes available, but the market also appears close to establishing a floor, or at least trying to. Future price movements will largely depend on demand from major importers such as India and Brazil, as well as overall farm profitability.”

The Rabobank analyst said phosphate markets present a different picture. “While buyers continue to resist high prices due to weaker farming profits this season, supply remains constrained. Fertiliser producers are competing with the mining sector for limited sulphur supplies – a key feedstock to manufacture phosphate fertilisers – while Chinese export restrictions and regional logistics issues continue to limit trade. Although improving trade flows may place some downward pressure on prices, any decline is expected to be marginal rather than structural,” Mr Pistoia said. “High sulphur and phosphoric acid costs continue to support phosphate values, and these supply chains will require months to get back on track. Around half of the world sulphur supply comes from Persian Gulf countries.”

Energy markets have also shifted. Mr Pistoia said as confidence grows that shipping through the Strait of Hormuz will continue improving, concerns about major supply disruptions have eased. “Brent crude prices have fallen into the low USD 70 per barrel range as markets increasingly expect oil flows to recover. However, a full return to normal conditions could still take several months,” he said. “While inventories continue to fall, weaker demand from China and Southeast Asia has helped stabilise prices, including in Australia. Despite ongoing physical tightness, futures markets are focusing more on the expected recovery in supply.”

Overall, Mr Pistoia said farm input markets are becoming increasingly divided. “Nitrogen prices are weakening as supply recovers, while phosphate markets remain supported by tighter fundamentals. In the months ahead, fertiliser affordability and the risk of renewed conflict in the Persian Gulf are likely to be the main drivers of price direction.”

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