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Fertiliser shortages lead to reduced food production, that’s about as simple as it gets. While many farmers have told me they have enough fertiliser for winter crop planting in late April, the real question is what happens as we move toward mid-year. Australia is almost entirely import dependent for fertiliser. A shortfall of specifically nitrogen fertiliser after planting could have a sizeable downward impact on crop yields and production in Australia.
The big challenge facing farmers is that for the time being crop prices are low, and due to the shortage of fertiliser, the cost of growing crops has gone through the roof. During my recent travels I saw nitrogen fertiliser prices jump to $1,300/mt, the next day $1,500/mt and some farmers even being quoted $1,600/mt. Prior to planting they were as low as $750/mt.
The US war in Iran is very different to Russia’s invasion of Ukraine from a wheat price perspective. Russia and Ukraine accounted for roughly 30% of global wheat exports. Black Sea port closures immediately at the onset of the war led to rocketing grain prices, buffering farmers from higher fertiliser and fuel costs. This time is very different. Iran is an importer of wheat, and no exporter has been stopped from exporting. Wheat prices haven’t risen due to the war. Furthermore, we still have plentiful wheat left over from last year. Argentina and Canada had record wheat crops at the end of 2025, and Australia produced more than expected.
This all changes as we head toward mid-year. Northern hemisphere winter wheat crops are coming out of winter dormancy now and will be nitrogen hungry prior to harvest at the end of June/July. On the Australia front, we’re yet to plant our winter crop. I’ve heard a broad range of responses from farmers so far to the higher cost of fertiliser and fuel: (1) deciding to switch away from nitrogen hungry crops like wheat and canola to feed barley (usually farmers don’t switch this close to planting) (2) farmers deciding they will be a lot more conservative with nitrogen application this season (leads to reduced yield and protein content of crops) (3) at the extreme, the occasional farmer even choosing just not to plant, the margins calculations simply don’t stack up. While usually farmers go ahead with planting in hopes the economics improve toward harvest, the rapid input price rise is making some question that mentality.
The duration of the closure of the Strait of Hormuz will determine the shortfall and price of fertiliser supplies this year. The shortage of fertiliser will determine the production and price impact. The main positive for Australian farmers is that (with the exclusion of northern NSW) soil moisture levels are looking good heading into planting, for some farmers even the best in years.
#agchatoz @Ross_Greenwood @SkyNewsAust

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