U.S. importers have begun diverting shipments of urea nitrogen fertilizer out of the country after a sharp rise in global prices made exporting those cargos more profitable, industry and market observers said.
Josh Linville, vice president for fertilizer at the financial services firm StoneX, said barges of imported urea at the Port of New Orleans were purchased this week with the intent of reloading them onto ocean vessels for export. "We saw a lot of physical barges that were being traded. They were linked to exports," Linville said. He added that "it is feasible to buy barges on the Mississippi River, reload them on a vessel, and ship them out."
The recent price surge followed, according to market accounts, the outbreak of war on February 28 involving the U.S., Israel and Iran. That conflict pushed nitrogen fertilizer prices higher as disruption around the Strait of Hormuz affected supply - with more than 30% of global exports caught in the near closure of the waterway. Oil and other commodity markets reacted to those developments as the Strait was later reported fully reopened after Israel reached a ceasefire with Lebanon, causing oil prices to fall sharply.
Despite the global spike, prices for urea at New Orleans have stayed materially lower than overseas benchmarks, leaving a roughly $170 per short ton arbitrage opportunity. That differential has prompted buyers to purchase U.S.-bound loads at port and resell them into higher-paying foreign markets, according to market participants.
With spring planting under way across large parts of the United States, those movements have intensified scrutiny from farming organizations and policymakers. Some farmer groups and Republican Senator Josh Hawley of Missouri have accused fertilizer companies of price gouging amid planting season pressures. Linville countered that the underlying dynamic is a simple economic incentive - U.S. prices are sufficiently low relative to foreign markets that cargos destined for the United States can be purchased and redirected.
The identity of many resellers in the opaque U.S. fertilizer trade remains unclear. Global producer CF Industries said in late March it was "foregoing new higher-priced export orders during this spring planting season" so that domestic farmers could secure supplies. The company statement addresses producer-level order decisions, but manufacturers control fertilizer production and sales only up to the point where product reaches distributors.
Retailers and traders, who handle downstream distribution and sales to farmers, exert significant control over how supplies move once product leaves manufacturing, complicating efforts to trace diverted cargos.
Affordability is a mounting concern. Fertilizer costs have climbed into territory described by analysts as unaffordable for many growers, particularly as crop prices have softened from the highs seen in 2022. On Monday, Rabobank characterized both nitrogen and phosphate fertilizers as well into "unaffordable" territory and warned that relief was unlikely in the near term.
"There could be a very long tail to this," said Stephen Nicholson, head of North American grains and oilseeds for Rabobank.
The combined picture - higher international prices driven by conflict-related supply risks, a sizable price gap at major U.S. ports, and an opaque resale market structure - has left farmers facing elevated input costs at a time when returns for many crops are far below 2022 levels. Market participants and analysts note these conditions could persist and continue to shape flows of fertilizer cargoes between U.S. ports and overseas buyers.