Episode summary
War in Iran Is Creating a Fertilizer Crisis Like Never Before | Odd Lots
Odd Lots
· · Hosts: Tracy Alloway, Joe Weisenthal · Guests: Alexis Maxwell
Summary
The episode argues that the Iran war is hitting fertilizer markets at the worst possible moment, just as farmers in the Northern Hemisphere are preparing for spring planting. Alexis Maxwell says urea prices have jumped sharply, and that the real issue is not just the outright price level but the price of nitrogen fertilizer relative to crop prices, which is now near record stress for corn growers.
Maxwell explains that urea is made from natural gas via ammonia, so fertilizer production is tightly linked to gas supply and to where cheap gas is available. She says the market is unusually vulnerable because there is little strategic storage, China is out of the export market, Russia is constrained by sanctions, and the Middle East supplies about 45% of the world's tradable urea and about 20% of ammonia. That makes replacement supply hard to find quickly.
The discussion also draws a straight line from fertilizer costs to farm economics and eventually to food prices. Maxwell says US farmers can reduce application rates, switch crops, or change nitrogen products, but lower nitrogen use could reduce yields later in the year. She expects lower US corn yields than last year and says the impact on food prices will likely work through over the next year or two.
Key takeaways
- Maxwell says the current shock is worse than a simple price spike because it hits fertilizer right before the spring planting window.
- The Middle East supplies about 45% of the world's tradable urea and about 20% of ammonia, leaving few easy substitutes when supply is disrupted.
- Maxwell says China, Russia, and the Middle East are all major constraints on replacement supply, with China exporting less and Russia facing sanctions.
- She expects US corn yields could fall to 182 bushels per acre from 186 last year if farmers cut nitrogen application rates.
- The episode argues that fertilizer pain will reach consumers slowly, through lower yields and higher food costs over the next year or two.
Notable quotes
“we have a USIsraeli war against Iran that is coming at perhaps the worst possible time in terms of agriculture”
“I couldn't think of a worst time to have a supply side shock and resulting surge in fertilizer prices for farmers effectively just about everywhere”
“about 45% of the world's tradable ura comes from the Middle East and about about 20% of the ammonia comes from along the Middle East as well”
“we are very close to so even though on a the pure gura price, not necessarily at all-time highs, but relative to corn, we are very close to alltime highs there”
“I'm thinking at this point that we could see the US corn yield be 182 bushels, but again, we still have a long road of production potential ahead of us”
How the episode opens
Bloomberg Audio Studios podcasts, radio, news. — Hello and welcome to another episode of the Odd Thoughts podcast. I'm Tracy Aloway — And I'm Joe Wisenthal. Joe, if you were a Roman general or a feudal lord and you wanted to wage war on your nextdoor neighbors, I don't know, this is completely hypothetical.
Yeah. — What time of year? — Yes. Really? — What time of year do you think would be the best time to actually do it? — You know, I haven't thought about this before, if I'm being totally honest. — You're not sitting at home thinking about if you were a Roman general at all hours of the day.
I'm the one guy who doesn't think about stuff like that. I don't know much about Rome. I go on. — Okay. So, for much of human history, if you were going to go to war, you would try to avoid certain times of year. And those times were generally the spring sewing season
And the fall harvest. And there's two reasons you would do that. One is because a lot of your soldiers are actually farmers. You know, they're part-time soldiers. So, their day job is farming. And the second one is you don't want to completely disrupt your food supply. Right. That makes a ton of sense. I hadn't thought about that, but yes, makes a ton of sense.
All right, so fast forward to 2026 and we've clearly forgotten much of human history because uh we have a USIsraeli war against Iran that is coming at perhaps the worst possible time in terms of agriculture. — You know, again, I hadn't thought about this at all. So I did learn over the last week, you know, when I think about the shutdown of the straight of Hormuz and so forth.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- iran oil spillover
- fertilizer urea crisis
- agriculture supply chain
- spring planting season
- food price impact
Companies and tickers mentioned
- Bloomberg Intelligence
- Bloomberg
Watch the episode
Watch “War in Iran Is Creating a Fertilizer Crisis Like Never Before | Odd Lots” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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