Fertilizer and energy prices have spiked due to the closure of the Strait of Hormuz, putting pressure on agricultural producers in Brazil and Argentina and sparking fears of a potential rise in food prices.
While the rise in fertilizer and energy prices is shifting incentives in production and energy markets, global supplies remain relatively robust and upward pressure on food prices appears weak for now. However, higher prices for key agricultural inputs are likely to have serious impacts for farmers that will reverberate through the food system.
The Strategic Importance of Brazil and Argentina
| Commodity | Share of World Exports |
|---|---|
| Wheat | 10% |
| Maize | 39% |
| Soybeans | 66% |
Brazil and Argentina account for 10% of wheat, 39% of maize, and 66% of soybean exports in the world, according to U.S. Department of Agriculture (USDA) estimates for the 2025/2026 marketing year. They also export a range of other agricultural products, including meats, tropical items, and cotton.
The Fertilizer Dependence
| Aspect | Details |
|---|---|
| Dependence | Both countries depend heavily on fertilizer imports |
| Key Source | Significant portion from the Persian Gulf region |
| Risk | Continued disruption could affect planting decisions and fertilizer application rates |
Both countries depend heavily on fertilizer imports, a significant portion of which come from the Persian Gulf region. A continued disruption in fertilizer markets could affect producer planting decisions and fertilizer application rates, which could, in turn, affect production and commodity prices.
Current Impact
| Factor | Status |
|---|---|
| Food Prices | Upward pressure appears weak for now |
| Input Prices | Fertilizer and energy prices have spiked |
| Farmer Impact | Already appearing at the country level in advance of this year’s planting |
These impacts are already appearing at the country level in advance of this year’s planting, as producers face higher fertilizer and energy costs and relatively low global market prices for food.
The Bigger Picture
A recent analysis by Arita and Glauber shows that while the rise in fertilizer and energy prices is shifting incentives in production and energy markets, global supplies remain relatively robust and upward pressure on food prices appears weak.
However, higher prices for key agricultural inputs are likely to have serious impacts for farmers around the world that will reverberate through the food system.
