Brazil Fertilizer Squeeze Tightens Before End-of-July Deadline

Brazil is facing a worsening fertilizer supply squeeze as the country approaches its peak dispatch window for the upcoming crop season. Although urea prices have eased slightly from the highs reached earlier this year, the underlying disruption tied to the Strait of Hormuz remains far from resolved, and the timing could not be more sensitive for Brazilian agriculture.

The Strait of Hormuz was effectively shut on February 28, 2026, after military strikes on Iran triggered a near total halt of commercial shipping through the world's most important energy and fertilizer chokepoint. For more than three months, crude tanker transits fell by roughly 95 percent and fertilizer cargoes were stranded. A breakthrough came with the signing of a US-Iran memorandum of understanding on June 17, 2026, after which the United States lifted its naval blockade and the strait began reopening on June 18. The first commercial tankers are now transiting along the Oman and Iran coastal routes.

The problem is that reopening the strait is a process, not a switch. The deep-water central channel remains closed because of an estimated 80 mines that still need to be cleared, an operation expected to take between 40 and 50 days and potentially up to six months for full normalization, according to Pentagon estimates. Until the channel is de-mined and safe transit corridors are certified, large-scale fertilizer flows out of the Gulf cannot resume at normal volumes. War-risk insurers also need evidence of stable conditions before reinstating coverage, without which most vessels will not move.

This lingering disruption lands at the worst possible moment for Brazil, the world's largest fertilizer importer alongside the United States. The country imports more than 80 percent of its fertilizer needs and depends almost entirely on foreign urea, with around 40 percent of globally traded urea normally moving through the Strait of Hormuz. The Persian Gulf is also a major source of phosphate, of which Brazil imports roughly 75 percent of its requirements.

Substitution efforts have so far proven insufficient. Nitrogen imports remain down about 15 percent year on year, and the gap cannot be closed quickly enough through alternative suppliers. Local urea prices in Brazil jumped roughly 35 percent when the conflict began, and when the disruption started less than 30 percent of Brazilian farmers had purchased fertilizer for the next crop season. Much of the supply that growers are counting on was expected to arrive between now and September, exactly the period now threatened by the slow pace of mine clearance.

The agronomic stakes are significant. First crop corn yields are at risk of falling by around 10 percent if Gulf urea shipments do not resume in volume before the end of July. Phosphate constraints are compounding the threat to the new crop, which could decline by as much as 10 million tonnes year on year. With the peak dispatch window approaching, the next several weeks will determine whether enough nutrient supply reaches Brazilian fields in time for planting decisions and application rates.

Broader market data underline the pressure. The World Bank fertilizer price index reached its highest level since October 2022, with benchmark urea climbing above 850 dollars per metric ton in April, up roughly 80 percent since February. Phosphate prices have also risen, driven by tighter supply and a doubling of sulfur prices since January, a situation aggravated by separate Chinese export restrictions on fertilizers.

For Brazil, the resolution of the crisis now hinges less on the political agreement, which is already signed, and more on the physical reality of clearing the strait. Each week of delay in restoring normal Gulf fertilizer flows raises the risk that Brazilian producers shift toward less fertilizer-intensive crops or reduce application rates, with consequences that could ripple through global grain and oilseed markets in the months ahead.