The Middle East conflict disrupts the global fertilizer supply chain, with CF Industries reaching a historic high

The surge in fertilizer prices triggered by Middle East conflicts is spreading from Wall Street to the American heartland, driving sharp gains in fertilizer producers’ stocks and forcing farmers to make tough decisions as spring planting season approaches.

The United Nations Conference on Trade and Development recently released a report indicating that shipping costs—including freight, marine fuel, and insurance—are also rising, increasing transportation costs across the entire fertilizer supply chain.

Investors are betting that U.S. fertilizer producers will capture more market share as Middle Eastern producers are unable to export products from the Persian Gulf. Additionally, because U.S. natural gas prices are relatively lower than overseas competitors, these companies’ profit margins are also expected to expand.

The conflict in the Middle East has already disrupted the global supply of large quantities of ammonia, urea, sulfur, and phosphates. Moreover, about 20% of the world’s liquefied natural gas (LNG) supply is affected, and European and other regional fertilizer producers heavily rely on these natural gas resources.

Since the U.S. and Israel began bombing Iran, European benchmark natural gas prices have risen about 60%. In contrast, U.S. natural gas futures have only increased around 14%, giving domestic fertilizer producers and other industries heavily dependent on natural gas—such as steel and plastics—a cost advantage.

Against the backdrop of a sluggish overall market, investors are seeking potential beneficiaries among listed companies.

Many investors are focusing on CF Industries, which consumes large amounts of natural gas to produce nitrogen fertilizers. On Thursday, its stock surged over 12% intraday, hitting a record high. This year, the stock has risen more than 75%, making it one of the hottest stocks of the year.

Mizuho Securities analyst Edlain Rodriguez said that investors expect CF Industries to be able to raise fertilizer prices to stay competitive globally, as overseas competitors need higher prices to offset rising natural gas costs. Meanwhile, CF Industries’ raw material costs are expected to remain relatively stable.

He added, “Their advantage comes from the gap between U.S. and European natural gas prices. The larger this gap, the more favorable their position.”

Other major North American fertilizer suppliers, Mosaic and Nutrien, have also seen their stock prices increase over 30% this year.

For American farmers already under cost pressures, the Middle East situation has caused fertilizer prices to rise by about 30%. This shock comes at a critical time when farmers are planning their spring planting.

Typically, farmers purchase most of their inputs in the fall. However, in recent years, continuous good harvests have led to falling crop prices, and tariffs implemented by the Trump administration have weakened export markets and increased costs, leaving many American farmers financially strained.

More farmers than usual are waiting until spring to buy supplies, expecting to receive subsidy checks from the Trump administration’s $12 billion agricultural relief plan.

By the end of last year, cash shortages led American farmers to cut back on fertilizer purchases. Mosaic, which mines potash in Western Canada and phosphate in Central Florida, said that this delayed purchasing decision has come at a significant cost.

Seed and pesticide seller Bayer expects farmers to reduce corn planting areas this year and increase soybean planting. However, company executives say this shift will weigh on performance, as corn tends to be more profitable.

Bayer’s agricultural division head Rodrigo Santos said in a recent investor call, “The extent of the shift from corn to soybeans is still uncertain, but it’s clear that soybean planting will increase.”

Some farmers may also directly reduce fertilizer application, hoping good weather will compensate for nutrient shortfalls.