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Happy Wednesday.
Everyone's watching oil. Almost nobody's watching the input that hits every loaf, cereal box, and supermarket receipt six months later.
Coffee at the ready.…
The Big Sip
Soaring fertilizer prices as a result of the Iran war may disincentivise farmers.
CF Industries is the S&P 500's top stock this month.
A third of the world's fertiliser is stuck behind a naval blockade, and CF is cashing the windfall. Fitch raised ammonia and urea forecasts by 25%. The Hormuz closure stranded a million metric tons of cargo in the Gulf. Farmers can't afford it. Shoppers can't see it yet. By autumn, they will.
If farmers plant less because fertiliser costs too much, this stops being a market story and starts being a grocery one.
Not everyone's hurting, mind. CF's gross margins are doing just fine.
Sponsor Break
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Here’s Your Brew
Nearly half of the world's seaborne urea transits the Strait of Hormuz.
The blockade has knocked out 22 million tonnes of annual exports. QatarEnergy declared force majeure — it can't guarantee deliveries.
There's no pipeline alternative.
CF Industries, sitting on cheap North American gas, was already running 40% gross margins before the blockade.
The stock is up over 65% this year. The Farm Bureau's Zippy Duvall publicly called on fertiliser companies to avoid gouging. CF sells at benchmark prices, not above them.
But when the benchmark doubles and your costs don't, the windfall writes itself.
Most US farmers pre-purchased fertiliser before the blockade.
John Yeley didn't. He's a seventh-generation corn farmer in Illinois. He rang his suppliers for a nitrogen price.
Nobody would give him one.
Farmers like him were already squeezed — US bankruptcies hit 315 filings in 2025, up 46%, before the blockade started.
As one Iowa farmers' union president put it:
The government cheque barely hits the farm before it goes straight back out to the fertiliser dealer.
Your trolley is next.
Fertiliser costs take 6-9 months to reach the shelf. One analyst estimate puts the hit at two extra percentage points on US food-at-home inflation.
By the time bread costs more, CF will have banked another record quarter.
Two Sides, One Mug
Curse and Coffee
Pro: CF and Nutrien built domestic capacity when others didn't — scarcity pricing is the market working as designed.
Con: When a crisis hands you a 65% rally while your customers go bankrupt, "the market working" is a generous description.
Our read: CF didn't cause the scarcity or set the price. But the gap between who banks the windfall and who pays at the checkout — that's the story.
Receipt of the Day
[Report] Fitch Ratings — Fertiliser Price Forecast Revision, March 2026
Fitch now expects ammonia at $375/ton (up from $300) and urea at $420/ton (up from $340) — driven entirely by the Hormuz closure.
Why it matters: These aren't spot prices that spike and fade. Fitch is revising the baseline. The new floor is higher.
Spit Take
CF Industries: +65%. Corn farmers: -85¢ per bushel.
One side calls it a rally. The other calls it planting season.
(AFBF, FinancialContent)
Extra Curricular Coffee Break Links
Fortune — US farmers forced to rethink spring planting — Former USDA chief economist: a bad call this year could be catastrophic.
Jakarta Post — China bans fertiliser exports, choking global supply — Up to 40 million tonnes restricted. India begging for quotas.
CNBC — Fertiliser shortage turns into a midterm weapon — Democrats smell an affordability angle in farm states..
Mugshot Poll 📊
Fertiliser companies are posting record profits during a crisis. Who picks up the tab?
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For the love of coffee, see you tomorrow!
Enjoy your Wednesday, keep it caffeinated.
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