NEW YORK: Fertiliser makers CF Industries Holdings Inc and Nutrien Ltd each reported nearly 20% jumps in sales for the latest quarter, showing the extent of the Iran war’s upheaval on supply chains for the key crop nutrients.
The windfall comes as the North American producers have benefited from higher prices for nitrogen fertilisers, which are applied across US corn and soy fields to support crop yields. Illinois-based CF Industries reported earnings per share that more than doubled from a year ago.
Canada-based Nutrien’s adjusted per-share earnings more than quadrupled, though they fell short of analyst estimates.
Prices for the inputs were already elevated prior to the start of the war due to a tight supply balance, prompting concerns from farmers and antitrust scrutiny from the Trump administration.
CF Industries’s performance comes “against a backdrop of strong global nitrogen demand and tight global nitrogen supply as we entered the year,” chief executive officer Chris Bohn said in a statement.
“The conflict with Iran has further constrained global nitrogen supply and exposed the fragile nature of the global nitrogen supply chain.”
Nitrogen-based fertilisers faced the most dramatic price increase following the closure of the Strait of Hormuz, a key passageway for the nutrients.
Nitrogen can’t be skipped, so farmers who delayed its use will likely buy the nutrient once supply is available, according to a note from Bloomberg Intelligence senior analyst Alexis Maxwell. Meanwhile, prices for natural gas – which is a necessary input – have not surged as much in the United States as in other markets, positioning the producers to capture higher ammonia margins, Maxwell said.
CF primarily produces nitrogen fertilisers, while Nutrien also manufactures phosphate and potash crop nutrients.
Phosphate prices have increased, as the strait is a route for both the nutrients and the sulphur needed to manufacture it.
Granular urea prices in New Orleans are up about 36% since the conflict began in late February, while prices in Egypt have jumped more than 70%, according to Bloomberg Green Markets data as of May 1. — Bloomberg
