Not just oil: Fertilizer prices spike amid Iran war, worrying Canadian
Christine McKee is alarmed by the skyrocketing cost of fertilizer that’s crucial to operating her southern Alberta farm.
The average cost of urea — a widely-used type of fertilizer — has increased rapidly since the U.S.- and Israel-led offensive against Iran brought war to a region critical to its global supply.
“If fertilizer prices continue to go up and commodity prices continue to stay where they’re at, then that really takes away our profitability,” said McKee, who farms near Lethbridge, Alta.
While her family has already purchased enough of the chemicals for the spring planting season, she’s worried about the fall.
“We know in the future we’re going to need fertilizer again, right? With every crop you plant, you need fertilizer.”
While the spike hasn’t yet affected food prices like the oil supply disruption immediately translated on gas pumps, experts say its impact could be felt in coming months if the conflict and its spillover effects persist.
Josh Linville, an analyst for financial services firm StoneX, says about one-third of global urea fertilizer exports passes through the Strait of Hormuz, located between Iran and the Arabian Peninsula.
Threats from Iran’s military against Western vessels has effectively brought shipping through the strait to a halt in the days since the war broke out.
That deterrence has made it mostly impossible for major shipments of oil, liquefied natural gas and fertilizer to leave a region that produces massive amounts of those products.
Even though Canada produces its own fertilizer supplies, buyers here are still subject to global commodity prices. It’s similar to the current spike to international oil prices having impact on Canada’s own crude and gasoline prices.
Oil prices spiked near $120 US a barrel for a time Monday as the U.S.-Israel war against Iran entered its 10th day. The threat of missile and drone attacks has all but stopped tankers from travelling through the Strait of Hormuz, and attacks on oil and gas facilities have exacerbated supply concerns.
The longer the price spike continues for oil, natural gas and nitrogen fertilizer, the more of a compounding effect there will be on Canadian producers, industry analysts told CBC News.
“We need a lot of fuel to run our equipment. And if fuel prices go up, that’s a big line item, a big expense for farmers,” said McKee.
Leigh Anderson, a senior economist at Farm Credit Canada, pointed out that global fertilizer supply was already under pressure.
“Even before what is happening in Iran, supplies of a lot of fertilizer were relatively tight already heading into this crop year which has kept a lot of fertilizer prices elevated,” Anderson said Monday.
‘A fundamental loss’
Benchmark prices for nitrogen fertilizer have surged about 30 to 40 per cent in the last week, according to analysts.
Linville, the StoneX analyst, said it was mostly the fear of…
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