More than 100 days after the outbreak of the conflict between the United States and Iran, the global fertilizer market is undergoing significant transformations. While geopolitical tensions continue to raise concerns about input availability and increasing logistics costs, Chinese exports and Indian demand have gained greater influence over price formation in recent weeks, a period during which urea prices experienced a sharp decline.

However, agricultural producers still face the challenge of balancing tighter margins, particularly in soybean production, amid climate uncertainties linked to the possible arrival of El Niño and elevated production costs driven by phosphate fertilizers. This combination could lead to reduced technological investment and potential productivity losses.

Nitrogen Fertilizers Decline, Providing Partial Relief to Production Costs

One of the most notable developments in recent months has been the decline in urea prices, driven by a combination of bearish factors. Among them are increased Chinese exports, supported by the release of additional volumes under export quotas, and seasonal market dynamics following the completion of purchasing programs in the Northern Hemisphere.

In addition, weaker demand from major global buyers-except for India, whose market remains heavily subsidized-has helped ease price pressure and gradually improve purchasing power ratios.

In Brazil, urea prices have returned to pre-war levels, falling by nearly US$200 per ton in just one month. The corn-to-urea exchange ratio improved by approximately 20 bags compared to early May. Nevertheless, the indicator remains above historical averages and significantly higher than the level recorded during the same period last year.

In this environment, caution continues to dominate producers' decisions. However, recent market improvements and the approaching planting season are bringing 2026/27 crop purchases into focus, allowing farmers to reduce exposure to future logistical risks and potential price volatility.

Ammonium Sulfate Gains Ground as an Alternative

Ammonium sulfate continues to offer the lowest cost per unit of nitrogen. However, the gap compared to urea has narrowed considerably following the recent price decline, making detailed evaluations of nutrient costs and agronomic suitability increasingly important for each production system.

The product's growing availability in the domestic market reinforces this trend. Between January and May, approximately 2 million tons of ammonium sulfate were imported, representing a 15% increase compared to the same period last year.

By contrast, urea imports totaled only 1.58 million tons, the lowest level in recent years and 25% below the volume recorded between January and May 2025.

Phosphates Remain the Main Bottleneck

While nitrogen fertilizers have provided some relief, phosphate fertilizers continue to face severe supply constraints, keeping prices at elevated levels.

One of the most important factors is the limited availability of sulfur, a critical raw material for phosphate fertilizer production. Currently, approximately 45% of global sulfur exports pass through the Strait of Hormuz, a region highly vulnerable to geopolitical tensions.

The situation is further complicated by growing demand for phosphoric acid used in electric vehicle battery manufacturing, adding a structural component of support to global phosphate prices.

Moreover, although China has partially relaxed restrictions on nitrogen fertilizer exports, it continues to limit phosphate exports while also facing production challenges caused by sulfur shortages.

As a result, prices for MAP (Monoammonium Phosphate) and substitute products remain elevated, creating historically unfavorable exchange ratios. In June of this year, producers needed approximately 10 additional soybean bags to purchase one ton of MAP compared to the same period in 2025.

Potash Fertilizers Provide Stability and Predictability

Unlike the volatility seen in nitrogen and phosphate markets, potash fertilizers have remained relatively stable, supported by consistent supply and steady demand.

This stability has provided producers with greater predictability and allowed them to advance purchasing decisions. Between January and May, Brazil imported 5.8 million tons of potassium chloride (KCl), an increase of 8% compared to the same period last year.

Although current prices remain higher than those recorded in 2025, exchange ratios are considerably more favorable than those observed for other nutrient categories.

Impacts and Strategies for the 2026/27 Season

Given the significant impact of phosphate fertilizers on production costs, lower application rates are expected during the upcoming season. At the same time, there is increasing adoption of lower-concentration nutrient sources as producers seek more cost-effective alternatives to traditionally used fertilizers.

In this context, each producer must carefully evaluate the adjustments that best fit their production system. Tools such as soil analysis, site-specific nutrient management, proper fertilizer source selection, and rigorous cost-benefit assessments will be essential to maximizing profitability.

Logistics will also remain a critical factor. Rising freight costs and delivery delays could create additional challenges for producers who postpone purchasing decisions.

Therefore, effective decision-making should take into account not only fertilizer prices and the specific characteristics of each nutrient but also the climate, logistical, and productivity risks that could affect the 2026/27 crop season.

Maísa Romanello
Market Intelligence Specialist - Fertilizers Safras & Mercado

Editor's Note: This article was originally written in Portuguese by Maísa Romanello. The English version was translated and professionally adapted by the editorial team of AgroLatam.com, preserving the technical content and original analytical perspective.