Goldman Sachs: Fertilizer shortages caused by the situation in the Hormuz Strait may push up grain prices.

Goldman Sachs said in a report on Tuesday that the supply of nitrogen fertilizer in the Strait of Hormuz is being disrupted, which could lead to a global decline in grain production, change planting decisions, and potentially drive up grain prices. The report pointed out that a shortage of fertilizer could result in delays or insufficient application of nitrogen fertilizer, leading to a decrease in grain production and prompting farmers to switch to crops such as soybeans that require less fertilizer. According to the Fertilizer Association of America, in the United States, in some years farmers import urea fertilizer which accounts for up to 50% of the total, and due to the supply still being about 25% lower than normal levels, spring planting may face challenges. Goldman Sachs stated that since the conflict erupted, the price of nitrogen fertilizer, which accounts for about 20% of grain production costs, has risen by 40%. One quarter of global nitrogen fertilizer trade and approximately 20% of liquefied natural gas transport - the key to nitrogen fertilizer production - passes through the Strait of Hormuz, which has effectively been blocked since the outbreak of the Iran war. Goldman Sachs warned that supply interruptions could lead to tight fertilizer supplies in other regions and increase production costs. Goldman Sachs added, "It seems that there is limited excess fertilizer production capacity outside of the Middle East." The bank pointed out that due to facility attacks and export restrictions, Russia's production is suppressed, with the country typically accounting for around 15% of global nitrogen fertilizer exports. Goldman Sachs stated that although American farmers have been relatively unaffected due to advance purchases before the planting season, supply disruptions in Europe, Australia, and the Southern Hemisphere could boost demand for U.S. grain exports and increase U.S. grain prices.