War in Iran Is Creating a Fertilizer Crisis Like Never Before

Joe Weisenthal (0:02)

Bloomberg Audio Studios, Podcasts, Radio, News.

Tracy Alloway (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:22)

And I'm Joe Weisenthal.

Tracy Alloway (0:24)

Joe, if you were a Roman general or a feudal lord, and you wanted to wage war on your next-door neighbors, I don't know, this is completely hypothetical.

Joe Weisenthal (0:34)

Yeah.

Tracy Alloway (0:35)

What time of year...

Joe Weisenthal (0:36)

Yes, really?

Tracy Alloway (0:37)

What time of year do you think would be the best time to actually do it?

Joe Weisenthal (0:42)

You know, I haven't thought about this before, if I'm being totally honest.

Tracy Alloway (0:45)

You're not sitting at home thinking about if you were a Roman general in all hours of the day?

Joe Weisenthal (0:49)

I'm the one guy who doesn't think about stuff like that. I don't know much about Rome. Go on.

Tracy Alloway (0:55)

Okay. So for much of human history, if you were going to go to war, you would try to avoid certain times of year, and those times were generally the spring sowing season and the fall harvest. And there's two reasons you would do that. One is because a lot of your soldiers are actually farmers. They're part-time soldiers, so their day job is farming. And the second one is you don't want to completely disrupt your food supply.

Joe Weisenthal (1:21)

Yeah, that makes a ton of sense. I hadn't thought about that, but yes, it makes a ton of sense.

Tracy Alloway (1:25)

All right. So fast forward to 2026, and we've clearly forgotten much of human history because we have a US-Israeli war against Iran that is coming at perhaps the worst possible time in terms of agriculture.

Joe Weisenthal (1:41)

You know, again, I hadn't thought about this at all. So I did learn over the last week, when I think about the shutdown of the Strait of Hormuz and so forth, obviously, I think oil and energy, I have become aware, through your writing and others, that it's also a major choke point or major throughway for related foodstuffs, including fertilizer. I had not heard anything about the timing element, however, until you just brought it up just now.

Tracy Alloway (2:07)

Yes. So everyone's getting ready for spring planting at the moment. So this is precisely when you theoretically would be using a lot of fertilizer. And just in the past week or so, we've seen prices for urea, which is one of the most popular types of fertilizer. Those have shot up like 25%.

It's also fascinating to me, I didn't know this, but we have all these different types of urea. So you have Egyptian granular urea, New Orleans urea. We're going to talk about all of it. I've wanted to do a fertilizer episode for a long time. I want to talk about what's going on with the Moroccan fertilizer industry as well, but I'm weirdly excited to be talking about urea today.

Joe Weisenthal (2:48)

I'm looking forward to it. Let's do it.

Tracy Alloway (2:50)

All right. We have the perfect guest. We're going to be speaking with Alexis Maxwell. She's an analyst on the Bloomberg Intelligence Agriculture team, and she's been writing a lot about this. So Alexis, thank you so much for coming on Odd Lots.

Alexis Maxwell (3:02)

Thank you for having me.

Tracy Alloway (3:04)

Is that framing correct? Is this kind of not a great time slash the worst possible time to be driving the price of fertilizer up?

Alexis Maxwell (3:12)

Yeah, definitely. I couldn't think of a worse time to have a supply side shock and resulting surge in fertilizer prices for farmers effectively. Just about everywhere. Second quarter is the timeline when the Northern Hemisphere starts their planting season.

Joe Weisenthal (3:31)

What is urea?

Alexis Maxwell (3:33)

Yeah, so urea is the most commonly used form of nitrogen. Crops are going to demand a variety of fertilizers, but the big three that you have to use are going to be your nitrogen, phosphate, and potash. In the industry, we call it your NPKs. Urea is a form of nitrogen. I think about this like a step ladder. If you want urea, the way that you get it is by starting first with natural gas. You crack it into ammonia, and then you run another chemical conversion on it, and you turn it into a granular product that is easy to apply, easy to transport, and is about 46% nitrogen. And for those of you who've never applied fertilizer or planted crops, you've probably bought some flowers at some point in your life. And you get a little packet that has some white crystals in it, you're going to have your Rhea in there to help your flowers grow.