Fertilizer stocks jump with Israel conflict stoking supply concerns

Israel’s Port of Ashdod, just north of Gaza and a key hub for the country’s potash fertilizer exports, is in emergency mode amid the deadly conflict. That’s putting as much as 3% of global potash supply at possible risk, Ben Isaacson, a Scotiabank analyst, said in a note Monday.

Further, if Iran, a critical nitrogen exporter in the region, is drawn into the conflict, Isaacson said prices of the nutrient needed for grain production could spike due to limited supply and potential premiums in benchmark Dutch TTF natural gas, a commodity used to make nitrogen-based fertilizers.

Nutrien Ltd., the world’s biggest potash maker, rose as much as 4.2%, the most since July. CF Industries Holdings Inc., the leading nitrogen producer, gained as much as 6.2%, the most in more than a month. Mosaic Co., climbed as much as 6.7%, the stock’s biggest intraday gain in almost a year.

Global fertilizer prices had significantly cooled this year after surging in 2022 due to supply disruptions from the war in Ukraine.

Potential involvement from Iran in the Israel conflict could endanger movement of vessels through the Strait of Hormuz, a vital conduit that Tehran has previously threatened to shut down. A third of traded liquefied natural gas passes through the waterway, Isaacson noted.

Firmer nitrogen prices were already expected later this year due to a nearly 10% surge in European natural gas prices following a pipeline leak in the Baltic, Alexis Maxwell, a Bloomberg Intelligence analyst, has said.