Hormuz Disruption May Impact Global Agriculture Prices

Goldman Sachs

Lina Thomas, Daan Struyven

Research

11 Pages

Goldman Sachs explains how the disruptions to the Strait of Hormuz impacts the global nitrogen fertilizer market (which accounts for 60% of global fertilizer use), and why the Middle East conflict underscores the role of commodities as a hedge against supply disruptions.

Key Takeaways

Fertilizer Flows Matter: More than a quarter of global nitrogen fertilizer trade and about 20% of LNG typically transit Hormuz.
Grain Supply Could Tighten: Fertilizer accounts for about 20% of grain costs, and US corn nitrogen application is roughly 50% pre planting plus 25% post planting.
Commodities Offer Insurance: Since the conflict began, nitrogen fertilizer prices have risen 40%, while the BCOM basket total return stands at 20% year to date.
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