Fertilizer prices have further to rise, even if the Strait of Hormuz is quickly reopened, and are likely to remain elevated through the end of next year due to damage to key facilities in the Persian Gulf, according to North Dakota State University’s monthly Agricultural Trade Monitor report released Tuesday.
The report offers three different scenarios, from an optimistic “quick reopening,” to a middle-of-the-road “contested transit,” to a worst-case “extended conflict” outlook. Read the report here.
“For U.S. producers, the immediate decision window is fall 2026 fertilizer purchasing. Under all three scenarios, fall prepay urea prices are materially above pre‐crisis levels,” the report said.
Even under the most optimistic “quick reopening” scenario, fall prepay urea is projected to average $636 per short ton, or 35% above pre‐crisis levels. Under the “contested transit” scenario, fall prepay urea is projected at $733 a short ton (up 56%), while DAP is similarly elevated: at $825 a short ton during the fall 2026 purchasing and application window, the report projected.
The closure of the Strait of Hormuz as a result of the U.S.-Israel war with Iran has choked off the transportation of fertilizer through the crucial waterway that connects the Persian Gulf to the world. The Gulf accounts for roughly 43% of seaborne urea exports, approximately 44% of seaborne sulfur, over a quarter of traded ammonia, and significant phosphate volumes via Saudi Arabia.
Fertilizer prices have soared, leaving farmers scrambling for supply and raising uncertainty over the 2026 U.S. crop mix. Economists, producers and grain traders will also be weighing the potential impact of reduced fertilizer applications on 2026 yields. A survey conducted for the National Corn Growers Association found that only 60% of U.S. farmers reported having their nitrogen fully purchased or secured for the 2026 growing season, while 64% said the same for phosphate.
Read: Fertilizer fight heats up as prices soar and survey points to bigger price risks in 2027
Here’s how the report, authored by NDSU agricultural economists Shawn Arita, Ming Wang, Jiyeon Kim, Rwit Chakravorty, and Sandro Steinbach, breaks down the possible scenarios:
Quick reopening
In the most optimistic scenario, the current ceasefire holds and is extended, while talks produce a framework agreement to end the fighting. Mine clearance in the Strait proceeds, allowing a single safe corridor opening within three to four weeks. Oil tankers transit first under coalition escort, followed in weeks 5 to 8 by fertilizer cargoes as insurance becomes available. The Strait is functionally reopens by July, with Brent crude trading in the $80 to $90 a barrel range.
Contested transit
In NDSU’s central scenario, the ceasefire survives, at least on paper, but the Strait remains functionally restricted. While some vessels trickle through, two-way traffic doesn’t resume until a second shipping lane opens around week 5 to 8. Vessel traffic, seen at 7% of pre-war levels in the first-week of the ceasefire, normalizes to 48% by September and 78% by March.
Extended conflict
In the report’s most pessimistic scenario, the ceasefire fails to hold, while hostilities resume at a lower level. The Strait remains 85% to 95% blocked through year-end and the “renormalization” process seen under the “quick reopening” scenario doesn’t start until late fall.
The report argues that even under the quick reopening scenario, urea prices won’t return to the pre-crisis level around $470 a short ton due to reported infrastructure damage. The report cites a 3-to-5-year repair timeline for crucial parts of Qatar’s Ras Laffan liquefied natural gas facilities. These units provide the natural gas required by fertilizer giant QAFCO and major producers in South Asia who rely on Qatari LNG to run their plants.
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NDSU’s model projects a long‐run structural floor of $532 a short ton, up 13% from pre-crisis levels, if the damage assessment is accurate, with pre-crisis pricing unlikely to return before 2028.
Affordability makes for a different kind of crisis
The report notes that the spike in fertilizer prices hasn’t challenged the peaks from the surge seen in 2022 following Russia’s invasion of Ukraine. But a key difference is that grain prices haven’t seen a sustained lift from the Iran war. After all, Russia’s invasion of Ukraine meant removed both grain exports and fertilizer supply from the market, allowing higher crop revenues to partially offset higher input costs.
“The Strait of Hormuz carries negligible grain trade, and grain stocks remain adequate, and crop prices are flat at approximately $4.40 to $4.60/bu corn versus $7.50+ in 2022,” the report noted. “Therefore, the 2026 pattern is structurally different with a slower ramp, a sustained plateau through fall, and a normalization that never returns to pre‐crisis levels.”
The chart below, using the report’s central “contested transit” scenario, compares prices in bushels of corn per ton of fertilizer.
“The affordability ratio shows why 2026 feels different,” the report said. “In 2022, the urea‐to‐corn ratio peaked at 124 because corn was above $7.50/bu, partially buffering the input cost shock. In 2026, the ratio reaches 174 bu/short ton under “Contested Transit” and 221 bu/st under “Extended Conflict,” nearly three times the long‐run average of 79, despite lower absolute urea prices.”
In other words, farmers absorb the full cost increase at $4.40 to $4.60/bu corn, the authors noted, describing the asymmetric impact as the “defining feature” of the 2026 crisis.
Demand destruction
So how much will global demand need to fall to clear the market? The report found that the central “contested transit” scenario would require cumulative demand destruction of 7 million metric tons over 12 months, a 14%, seasonally-weighted reduction.
Brazil and the European Union are set to bear the brunt of the adjustment, with Brazil particularly hard hit since its peak urea import season, running from July to November, overlaps directly with the stretch of highest projected prices, the report said, concentrating its exposure during the worst months of the disruption.
U.S. imports, by contrast, are heaviest in January through May, by which time prices will have begun to normalize under the “contested transit” scenario.
Still that leaves Brazil, the EU, and the U.S. to absorb the bulk of the global demand reduction, the report said, while India’s subsidy regime insulates its farmers from world price signals, forcing unsubsidized importers to cut back further to clear the market.