Mideast war continues to disrupt fertilizer demand, prices, Nutrien CEO says

Executives for Saskatchewan-based Nutrien Ltd. NTR-T are raising concerns over the potential for high prices to dampen demand for fertilizer products, as the months-long bottleneck in the Strait of Hormuz disrupts global supplies.

Approximately one-third of the world’s fertilizer passes through the critical Middle East trade corridor. The strait is also a key artery for the supply of feedstocks essential to the production of nitrogen and phosphate, including natural gas and sulphur.

Farmers’ ability to afford fertilizer has been a growing concern since the war in the Middle East erupted. While fertilizer prices have reached near record highs, prices for major crops including corn, soybean and canola all fell last year, largely owing to trade disputes between China, the United States and Canada.

Nutrien is closely watching how the closing of the Strait of Hormuz has “disrupted trade flows and volumes,” chief executive officer Ken Seitz said on a call with analysts on Thursday, the morning after the company announced its second-quarter results, citing demand destruction in certain products.

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After a strong first quarter, the fertilizer giant fell short of analysts’ estimates for second-quarter profits, as the Mideast conflict continues to disrupt fertilizer supply chains, driving up production costs and prices.

The World Bank’s fertilizer price index rose more than 12 per cent across the first quarter of 2026, the highest level since October, 2022, in large part owing to the disruption in the strait.

Mr. Seitz said there was “no clear conclusion” in sight to resolve the volatile geopolitical situation affecting both the fertilizer giant, and agricultural productivity worldwide.

The World Bank is forecasting the fertilizer price index to climb by more than 30 per cent over the year. Urea prices for North American farmers will be around 35 per cent above precrisis levels through 2027, according to a report from North Dakota State University, with prices expected to remain 13 per cent above precrisis levels into spring 2028.

In its second quarter, Nutrien reported a 3-per-cent decline in net sales for nitrogen products owing to low volumes. A significant hike in production costs for phosphate resulted in a 75-per-cent decrease in adjusted EBITDA (or earnings before interest, taxes, depreciation and amortization) for the phosphate division. Potash net sales climbed 6 per cent and reached over $1-billion, but fell short of the 24 per cent growth seen in the first quarter of 2026.

The Mideast war has resulted in substantial damage to fertilizer production facilities in the region, as well as to natural gas facilities that export LNG for the purpose of nitrogen production. Even if the Strait of Hormuz opened immediately, the effects on the supply chain would take time to resolve, Mr. Seitz said.

“We are looking to potentially long-term disruption as we consider damage to infrastructure,” he said.

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Compared with global competitors, Nutrien is somewhat immune to the disrupted supply chain.

Nutrien’s 11 North American nitrogen plants source natural gas largely from Canada and the U.S. The company’s legacy fertilizer product – potash – is mined from vast reserves in Saskatchewan’s Prairie Evaporite Formation.

But while the supply chain for potash is unaffected by disruptions in the strait, it is still exposed to geopolitical tensions. Because the fertilizer is not as essential to crop development as nitrogen, there is a risk that farmers might buy less potash in order to afford the more crucial nutrient. The price of potash has also climbed. According to the World Bank, potash prices rose by more than 5 per cent in the first quarter and nearly 17 per cent year over year amid sustained demand.

On the investor call, Chris Reynolds, executive vice-president of global sales at Nutrien, said potash remains a stable part of the business, and that demand continues to grow in international markets as major buyers like China are “prioritizing security of supply.”

“We are feeling good about demand for potash for the balance of the year. It is still the most affordable nutrient out there, and we’re seeing that in major markets,” he said.

Nutrien had a great first quarter of the year, with a 19-per-cent hike in sales compared with the same period in 2025.

The company reported adjusted earnings of US$2.61 a share for the second quarter, missing analysts’ estimate of US$2.71, according to LSEG data.

Nutrien shares fell from $94.17 at market close on Wednesday to $93.62 at market close Thursday.