Global Grain Production at Risk Due to Fertilizer Supply Disruptions, Goldman Sachs Reports

Goldman Sachs has reported that disruptions in nitrogen fertilizer supplies through the Strait of Hormuz could lead to a decline in global grain production and alter planting decisions, potentially driving up grain prices. According to Jin10, the report highlights that a shortage of fertilizers might delay or reduce nitrogen fertilizer application, resulting in lower grain yields and prompting farmers to switch to crops like soybeans, which require less fertilizer. Data from the U.S. Fertilizer Institute indicates that in some years, up to 50% of urea fertilizer used by American farmers is imported. With supply levels still about 25% below normal, spring planting could face challenges. Goldman Sachs noted that since the onset of the conflict, nitrogen fertilizer prices, which account for approximately 20% of grain production costs, have risen by 40%. Supply disruptions could tighten fertilizer availability in other regions and increase production costs. While U.S. farmers remain relatively unaffected due to early procurement before the planting season, disruptions in Europe, Australia, and the Southern Hemisphere could boost demand for U.S. grain exports and elevate U.S. grain prices.