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High urea prices likely to linger

An agricultural economist with North Dakota State University says farmers aren’t likely to see relief from high urea prices anytime soon.

During a webinar Thursday hosted by the International Food Policy Research Institute (IFPRI), Shawn Arita says disruptions caused by the closure of the Strait of Hormuz will linger.

“Even in the most optimistic scenario, we are still seeing $600 to $700 well through the fall period.”  He says, “Through 2027 we see prices along the $500 to $600 range. It was about $400 to $500 before the crisis.”

He says the longer the Middle Eastern conflict restricts the flow of fertilizer, the greater the impact.

“Now in our most pessimistic scenario where there is a very extended conflict, they do shoot up well past what we saw in 2022, upwards of $1000 per metric ton,” he says.

Around 35% of global urea moves through the Strait, and Arita says getting it moving again once hostilities end will take time.

“It’ll take weeks, if not months.”  He says, “But we do see a prolonged level of elevated prices because we do expect that the renormalization process will be more gradual.”

Arita says relatively low commodity prices mean the fertilizer price spikes have an even greater impact on farm profitability in an already challenging cycle.