Executives at Nutrien Ltd., a prominent fertiliser company based in Saskatchewan, are voicing apprehensions that soaring prices could suppress demand for their products, particularly as the conflict in the Middle East has led to significant disruptions in global supply chains. The Strait of Hormuz, a critical maritime route through which roughly a third of the world’s fertiliser transits, has been severely affected, raising concerns over the availability and affordability of essential agricultural inputs.
Disruptions in the Strait of Hormuz
The Strait of Hormuz serves as a vital conduit not only for fertiliser but also for key feedstocks, including natural gas and sulphur, necessary for the production of nitrogen and phosphate fertilisers. The ongoing military conflict in the region has compounded existing supply issues, leading to elevated fertiliser prices that farmers are increasingly struggling to bear.
Nutrien’s CEO, Ken Seitz, highlighted the urgency of the situation during a recent analysts’ call, noting that the closure of the strait has resulted in “disrupted trade flows and volumes.” This disruption has been particularly detrimental as the prices for major crops such as corn, soybean, and canola fell last year, primarily due to ongoing trade tensions involving China, the United States, and Canada.
Financial Performance Under Pressure
Following a robust first quarter, Nutrien’s second-quarter results did not meet analysts’ expectations, reflecting the ongoing supply chain challenges brought about by the conflict in the Middle East. The World Bank reported a 12 per cent rise in its fertiliser price index during the first quarter of 2026, the highest increase since October 2022, primarily due to the disruptions in the strait.
Despite a slight 3 per cent dip in net sales for nitrogen products attributed to low volumes, Nutrien’s potash sales grew by 6 per cent, exceeding $1 billion. However, this growth was notably less than the 24 per cent increase seen in the previous quarter. The company’s phosphate division suffered significantly, reporting a staggering 75 per cent drop in adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA).
Mr. Seitz stated that the geopolitical instability is unlikely to resolve quickly, indicating potential long-term disruptions in supply chains. He remarked, “Even if the Strait of Hormuz were to reopen immediately, the ramifications on our supply chains would persist.”
Nutrien’s Competitive Edge
While global competitors may be more vulnerable to these disruptions, Nutrien appears to have a degree of insulation due to its North American operations. The company operates 11 nitrogen plants that predominantly source natural gas from Canada and the U.S., and it benefits from extensive potash reserves located in Saskatchewan’s Prairie Evaporite Formation.
Nevertheless, the rising prices of potash—up more than 5 per cent in the first quarter and nearly 17 per cent year-on-year—pose a challenge. As farmers weigh their options, there is a risk that they might opt to purchase less potash in favour of more critical nitrogen products. Chris Reynolds, Nutrien’s executive vice-president of global sales, expressed optimism regarding potash demand, stating, “We are feeling good about demand for potash for the balance of the year. It is still the most affordable nutrient out there, and we’re seeing that in major markets.”
Market Reactions and Outlook
Nutrien reported adjusted earnings per share of US$2.61 for the second quarter, falling short of the US$2.71 projected by analysts. Following the announcement, the company’s stock experienced a slight decline, closing at US$93.62, down from US$94.17 the previous day.
Despite these challenges, Nutrien had a successful first quarter, achieving a 19 per cent increase in sales compared to the same period in 2025, which bodes well for its resilience in the face of current market turmoil.
Why it Matters
The ongoing conflict in the Middle East and its impact on fertiliser supply chains underscore the vulnerabilities within global agricultural markets. As prices soar, the ability of farmers to access affordable fertilisers is increasingly jeopardised, which could have cascading effects on food production and prices worldwide. The situation illustrates the interconnectedness of global trade and the pressing need for stability in critical regions to ensure the sustainability of agricultural practices.