The battle in Iran may elevate international meals costs because the battle disrupts fertilizer shipments by way of one of many world’s most crucial commerce routes.
Whereas power markets have targeted on oil provide dangers, analysts say threats to fertilizer provide chains by way of the Strait of Hormuz may deliver long-term financial points by way of meals inflation.
“Past power, one other threat receiving much less consideration is the potential knock-on impact on meals costs, as fertilizer shortages push agricultural prices greater,” mentioned Wolfe Analysis chief economist Stephanie Roth in a observe written on Tuesday.
Roth estimates the disruption may elevate “food-at-home” inflation by roughly 2 proportion factors, including about 0.15 proportion factors to headline inflation within the U.S., on prime of roughly 0.40 proportion level improve from power.
These potential value hikes come as U.S. shoppers face a sustained stretch of upper costs for meals, housing and power. Inflation for meals at dwelling climbed 2.4% 12 months over 12 months in February, the Bureau of Labor Statistics mentioned Wednesday.
Clients store at Walmart in Little Rock, Arkansas, Jan. 22, 2026.
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A couple of-third of worldwide traded fertilizer passes by way of the Strait of Hormuz, making it a vital artery for agricultural provide chains. Business visitors by way of the route has largely been halted because the battle began late final month, disrupting shipments simply as farmers throughout the Northern Hemisphere put together fields for spring planting.
The timing is vital as a result of fertilizers are utilized early within the crop cycle and assist decide yields later within the 12 months.
“If fertilizer provide tightens throughout this window, farmers might scale back utility charges,” Roth mentioned within the observe. That would scale back yields for crops like corn, soybeans, wheat and rice, and improve agricultural prices.
Economists within the fertilizer business are equally involved and say costs are already rising.
Between the weeks ending Feb. 27 and March 6 — which embody the beginning of the battle — the value per quick ton of urea fertilizer imports within the U.S. jumped by 30%, in line with information collected by business advocacy group The Fertilizer Institute.
Urea — a nitrogen-based fertilizer extensively used to spice up crop yields — is likely one of the most closely traded fertilizers transferring by way of the area.
Greater fertilizer costs for farmers and retailers may in the end elevate meals prices for shoppers if the commerce disruption lasts, mentioned Veronica Nigh, chief economist at The Fertilizer Institute.
“This can be a international influence on fertilizer prices,” mentioned Nigh. “I might think about that there could be rather more passing on of those prices to shoppers on this state of affairs, which isn’t one thing we’ve got seen earlier than.”
The U.S. depends on international fertilizer markets, importing roughly 20% of its complete use, although nitrogen fertilizers like urea come from a extra wide-ranging group of suppliers, together with Canada, Trinidad and Tobago, Russia and elsewhere.
The ripple impact may stretch world wide and past commodities. Asia and Africa are particularly depending on fertilizer exports from the Gulf area. International locations resembling India rely closely on Gulf provides, whereas a number of African economies depend upon imported supplies used to supply fertilizers.
Whereas disruptions to fertilizer shipments may decrease crop yields for farmers and lift prices for households, fertilizer producers may stand to profit.
CF Industries hit an all-time excessive Monday and shares are up almost 10% over the previous week, the corporate’s largest multiday acquire since 2022.
Correction: This story has been revised to mirror that the Iran battle is disrupting fertilizer shipments by way of the Strait of Hormuz. A earlier model misspelled the identify of the physique of water between the Persian Gulf and the Gulf of Oman.