Fertilizer supplies to Southern Hemisphere agricultural powerhouses like Brazil and Argentina are at risk as a fragile ceasefire between the US and Iran frays just as planting season nears.
The flow of fertilizer ships entering the Persian Gulf — a region that accounts for about a third of global urea exports — has slowed to a trickle since late June as tensions began to rise again with a spate of Iranian attacks on vessels transiting the Strait of Hormuz.
Just four empty vessels booked to load fertilizer cargoes have transited the waterway into the Gulf since June 30, tanker tracking data compiled by Kpler and Bloomberg show. Two of those ships have recently loaded cargo but are yet to depart.
Pre-conflict, between 20 and 40 ships would typically load fertilizer from the broader Gulf region every week. That number has now fallen to around five ships, according to Serena Piazzo, dry bulk shipping market analyst with ship broker Ifchor Galbraiths.
“If this really is the end of the US-Iran ceasefire, it means that the fertilizer market’s biggest problem will be shipowner confidence,” she said. “If shipowners decide that transiting the Strait of Hormuz to load fertilizer cargoes is too risky, then these cargoes will not reach their international customers.”
The timing is especially sensitive, with forecasts of an exceptionally powerful El Niño pattern raising weather risks for farmers already buffeted by fertilizer disruptions and high energy costs from the Iran war. Brazil and Argentina are two of the world’s top crop exporters and damage to their agriculture business has a ripple-down effect on food prices around the world.
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