American fertilizer purchasers are shipping imported supplies overseas to capitalize on higher international prices driven by ongoing Middle East conflicts, according to industry analysts.
Josh Linville, vice president for fertilizer at financial services firm StoneX, reported that barges carrying imported urea nitrogen fertilizer were bought this week at the Port of New Orleans specifically for overseas export.
“We saw a lot of physical barges that were being traded. They were linked to exports,” Linville explained. “It is feasible to buy barges on the Mississippi River, reload them on a vessel, and ship them out.”
Nitrogen fertilizer costs have skyrocketed since the United States and Israel began their conflict with Iran on February 28, with over 30% of worldwide exports disrupted by Iran’s near-complete closure of the Strait of Hormuz. The waterway fully reopened after Israel’s ceasefire with Lebanon was announced Friday, causing oil prices to drop significantly.
Despite global fertilizer costs surging, domestic prices at New Orleans remain approximately $170 per short ton lower, creating lucrative arbitrage opportunities for buyers willing to redirect supplies.
As spring planting season progresses, some farming organizations and Republican Senator Josh Hawley of Missouri have criticized fertilizer companies for alleged price manipulation. However, Linville noted that domestic prices are so much lower compared to international markets that urea nitrogen fertilizer originally destined for American use is being purchased at ports and resold to higher-paying overseas customers.
The identity of companies redirecting these American imports remains unclear due to the fertilizer market’s lack of transparency.
Global fertilizer manufacturer CF Industries announced in late March that it was “foregoing new higher-priced export orders during this spring planting season” to ensure American farmers could access necessary supplies.
However, manufacturers only maintain control over fertilizer products like urea until they reach distribution networks. Retailers serving farmers and commodity traders manage much of the fertilizer supply chain beyond that point.
Rising fertilizer costs have become a significant worldwide concern for agricultural producers dealing with declining crop prices, which remain well below the levels farmers received in 2022 when fertilizer prices spiked following Russia’s invasion of Ukraine.
On Monday, Rabobank, the international agricultural banking institution, characterized both nitrogen and phosphate fertilizers as reaching “unaffordable” levels, with minimal relief expected for several months.
“There could be a very long tail to this,” warned Stephen Nicholson, head of North American grains and oilseeds for Rabobank.
