Fertilizer Stocks Rise As Supply Fears Are Amplified by the Israel Conflict

After Hamas' surprise attack on Israel sparked worries about how the conflict would affect the world's supplies of fertilizers needed to grow vital food crops, fertilizer manufacturers’ stocks leaped.

Amidst the deadly fighting, Israel's Port of Ashdod, located just north of Gaza and serving as a major hub for the country's exports of potash fertilizer, is in emergency mode. As a result, up to 3% of the world's potash supply may be at risk, according to a note written on Monday by Scotiabank analyst Ben Isaacson, cited by Bloomberg.

Furthermore, according to Isaacson, if Iran—a vital supplier of nitrogen to the region—becomes embroiled in the conflict, the price of the nutrient might skyrocket as a result of a shortage and possible premiums on benchmark Dutch TTF natural gas, which is a commodity used to produce nitrogen-based fertilizers.

The largest producer of potash in the world, Nutrien Ltd., saw a 4.2% increase, the most since July. The largest nitrogen producer, CF Industries Holdings Inc., saw gains of up to 6.2%, the highest level in over a month. Mosaic Co. saw its largest intraday rise in nearly a year, rising as much as 6.7%.

Due to supply interruptions brought on by the conflict in Ukraine, fertilizer prices worldwide saw a sharp decline in 2022 and then sharply recovered this year.

Iran's possible intervention in the Israeli war might jeopardize vessel traffic through the Strait of Hormuz, an essential route that Tehran has threatened to close in the past. According to Isaacson, the waterway is traversed by one-third of the traded liquefied natural gas.

According to Bloomberg Intelligence analyst, Alexis Maxwell, a nearly 10% increase in European natural gas costs as a result of a pipeline break in the Baltic was the reason for the earlier prediction of firmer nitrogen prices later this year.