Saskatchewan-based Nutrien Ltd. has expressed concerns about ongoing disruptions to the global fertilizer market amid continued turmoil in the Middle East. The company cited damage to fertilizer production and natural gas facilities in the region, as well as a protracted bottleneck in the Strait of Hormuz, as contributing factors that are driving production costs higher and impacting supply chains.
The Strait of Hormuz is a critical passage for about one-third of the world's fertilizer shipments and is also essential for the transport of feedstocks like natural gas and sulphur used in nitrogen and phosphate fertilizer production. Since the outbreak of conflict in the Middle East earlier this year, these disruptions have led to significant price increases and uncertainty in agricultural markets worldwide.
Nutrien’s CEO, Ken Seitz, noted during a recent earnings call that the company is monitoring demand erosion resulting from elevated prices. Despite a strong start to the year, Nutrien's second-quarter profits fell short of analyst expectations, reflecting the ongoing challenges. The World Bank’s fertilizer price index rose more than 12 percent in the first quarter of 2026, reaching its highest level since late 2022, with projections estimating it could climb over 30 percent for the full year.
The conflict has caused notable damage to production facilities in the Middle East, including liquid natural gas infrastructure crucial for nitrogen fertilizer manufacturing. Seitz highlighted that even if the Strait of Hormuz were to reopen immediately, the supply chain would face long-term disruptions due to this infrastructure damage.
Within Nutrien’s operations, nitrogen product sales saw a 3 percent decline in the second quarter, while phosphate production experienced a sharp 75 percent drop in adjusted EBITDA amid rising production costs. Potash sales, however, grew by 6 percent to over $1 billion, albeit with slower growth compared to the first quarter's 24 percent increase. Nutrien benefits from domestic natural gas sources for nitrogen production and extensive potash reserves in Saskatchewan, somewhat insulating it from direct supply interruptions linked to the strait.
Despite these challenges, executive vice-president Chris Reynolds reported steady demand for potash in key international markets, including China, where buyers emphasize supply security. While potash is viewed as less critical to crop development than nitrogen, it remains the most affordable fertilizer nutrient and continues to experience price increases; the World Bank noted a year-over-year potash price rise of nearly 17 percent through the first quarter.
Looking ahead, Nutrien anticipates potential long-term impacts on the fertilizer supply chain and cautions that farmers' purchasing decisions may shift due to fluctuating fertilizer prices amid broader geopolitical instability. The company posted adjusted earnings of $2.61 per share for the second quarter, slightly below analyst estimates, and its shares declined modestly following the earnings announcement.