Iran war lifts fertilizer prices but crushes profits and raises costs for US farmers
Rising input prices from Middle East tensions squeeze margins, signaling higher production costs and tighter farm profitability ahead.
On May 11, 2026, Mosaic Co. reported significant losses as the Iran conflict disrupted global input markets, sending fertilizer prices higher while sharply increasing production costs. This matters for US farmers because it signals rising input costs and tighter margins heading into the next planting cycle.
The geopolitical conflict has severely impacted global supply chains, particularly through the Strait of Hormuz. Roughly 20% of global phosphate trade and nearly 50% of sulfur flows depend on this critical route, making it a major pressure point for fertilizer markets.
Despite higher phosphate prices - including diammonium phosphate (DAP) reaching its highest levels since last October - Mosaic failed to benefit financially. The company posted a $373 million operating loss, with earnings far below analyst expectations.
Rising input costs outweigh price gains
The core issue lies in production costs. Sulfur, a key component in phosphate fertilizers, surged to record levels, averaging $379 per ton - more than 20% higher than the previous quarter. Ammonia prices have also climbed, compounding cost pressures.
This creates a critical imbalance: fertilizer prices are rising, but input costs are rising even faster, compressing margins across the value chain, from manufacturers to farmers.
Meanwhile, competitors such as CF Industries Holdings Inc. and Nutrien Ltd. reported nearly 20% sales increases, benefiting from nitrogen fertilizer markets, which are less exposed to sulfur constraints.
Direct impact on US farmers and farm economics
For US producers, the implications are immediate. Higher fertilizer costs directly increase input costs, reducing farm profitability and tightening already narrow margins. Analysts warn there is limited room to pass these costs on, given current commodity price pressures and farmer purchasing power.
Mosaic has also withdrawn its 2026 phosphate production guidance and idled facilities in Brazil, removing about 1 million tons of supply from the market. This could keep fertilizer prices elevated and increase uncertainty for crop planning and input purchasing decisions.
From a policy perspective, this situation may influence discussions around the farm bill, crop insurance, and risk management tools. Input volatility directly affects yields, planting decisions, and overall farm income stability.
The convergence of geopolitical risk, supply chain disruptions, and record input costs suggests continued volatility in fertilizer markets.
