AmericasOilWatch Special Report — North America's gas advantage meets Brazil's import risk.
The global fertilizer crisis did not become the physical supply collapse that appeared possible when traffic through the Strait of Hormuz fell to a near-standstill.
The global market adapted.
International Trade Centre data reported by the Financial Times show urea imports originating from Gulf exporters falling by roughly 85%, while total global fertilizer imports declined by only around 6%.
Egypt and Nigeria sharply increased exports, while the United States, Russia and China expanded their presence in important replacement markets.
That prevented a severe regional supply loss from becoming a comparable global loss.
But it did not restore the old economics.
Urea remained approximately 70% more expensive year-on-year during the second quarter.
For the Americas, that creates an unusually divided picture.
North American nitrogen producers sit on one of the world's strongest natural-gas platforms.
Brazil, one of the world's largest agricultural producers, sits on the opposite side of the equation: exceptionally dependent on imported fertilizer and therefore directly exposed to international prices, shipping and exchange rates.
The same global shock can therefore improve the economics of a North American nitrogen plant while damaging the economics of a Brazilian farm.
North America's biggest advantage is beneath the ground
Nitrogen fertilizer is fundamentally manufactured natural gas.
Ammonia production combines nitrogen from the air with hydrogen normally derived from natural gas. For many producers, natural gas accounts for more than 70% of the variable cost of producing ammonia.
That puts North America in an unusually strong position.
The US Energy Information Administration expects American dry-gas production to reach a record 111.7 billion cubic feet per day in 2026 and 115.9 Bcf/d in 2027, up from 107.6 Bcf/d last year.
US LNG exports are also expected to set records at 17.4 Bcf/d in 2026 and 18.6 Bcf/d in 2027, yet winter gas inventories are still expected to begin around 5% above the five-year average.
That combination is strategically important.
Europe is struggling with extraordinarily expensive gas.
North American producers have access to a deep continental resource base.
A global nitrogen-price surge therefore affects the two regions very differently.
The fertilizer shock strengthened North American nitrogen economics
That difference became visible almost immediately after the Middle Eastern disruption.
Reuters reported in May that nitrogen-focused producers including CF Industries and Nutrien were benefiting from sharply higher international fertilizer prices while their natural-gas costs remained comparatively stable.
Urea prices at New Orleans had increased more than 46% from late February, averaging about $490 per short ton during the first quarter. Analysts expected CF Industries and Nutrien to outperform fertilizer producers with greater exposure to phosphate or potash.
CF's own first-half results show how strong that position became.
The company reported $1.34 billion in first-half net earnings and operated at 98% of available ammonia capacity. It described global nitrogen supply-demand fundamentals as constructive into 2027.
This is almost the mirror image of Europe's fertilizer problem.
When global nitrogen prices rise and natural gas rises even faster, European ammonia production can become uneconomic.
When global nitrogen prices rise while domestic gas remains comparatively abundant, North American nitrogen producers can capture the spread.
Energy security becomes fertilizer competitiveness.
Canada occupies another strategically important position
Canada adds a second advantage.
Nutrien is not only a major nitrogen producer but the world's largest potash producer.
Its first-quarter results showed higher profits as prices and sales strengthened across nitrogen, phosphate and potash. The company warned, however, that nitrogen supply would remain tight through 2026 because trade recovery was uneven, production restarts were limited and Chinese and Indian urea trade remained uncertain.
North America therefore has considerable domestic fertilizer capacity.
But it is not isolated from global markets.
North American producers sell into those markets.
When international prices rise, export opportunity rises with them.
That can be positive for producers and less comfortable for domestic farmers.
American farmers do not experience the shock the same way as American producers
This is the important distinction.
Cheap relative gas does not mean cheap farming.
US farmers have faced higher fertilizer costs while crop prices and margins have remained under pressure.
Earlier in the year Reuters reported that rising fertilizer and energy costs were complicating 2026 corn planting decisions, with some farmers considering shifts toward soybeans because nitrogen-intensive corn had become less attractive.
By September the energy problem had broadened.
US diesel prices have reached record levels. Reuters reported on September 18 that the national average had hit $6.29 per gallon in the week of September 14, around 68% higher than a year earlier, according to EIA data, with harvest operations and agricultural transport directly affected.
Rail costs are also transmitting the shock.
USDA data reported by Reuters show grain rail fuel surcharges up 153% year-on-year, reaching 48 cents per mile per railcar and representing around 11% of grain rail costs, up from 5% a year earlier.
So the US agricultural system currently contains two very different energy stories:
abundant natural gas supporting competitive nitrogen production, and
extraordinarily expensive diesel squeezing farmers and agricultural logistics.
Both are consequences of energy markets.
They simply enter agriculture at different points.
Brazil sits on the other side of the fertilizer map
If North America demonstrates the value of domestic feedstock, Brazil demonstrates the risk of import dependence.
Brazil imported a record 45.5 million metric tons of fertilizer in 2025, up from about 44.3 million tonnes the previous year.
Official Brazilian trade data put the value of those imports at roughly $15.5 billion.
That enormous import system supports one of the world's most important agricultural export industries.
It also creates a structural vulnerability.
When the global fertilizer market tightens, Brazil cannot simply turn to enough domestic production to replace missing imports.
It has to compete internationally for replacement tonnes.
The Hormuz shock demonstrated the consequences.
StoneX estimated that urea delivered to Brazil jumped around 35% in only two weeks during the early phase of the crisis, according to Reuters. Buyers responded partly by increasing interest in alternatives such as ammonium sulphate.
This is exactly the kind of adjustment now occurring across the global system.
Supply does not simply disappear.
Buyers change origin.
They change product.
They delay purchases.
They accept a different nutrient formulation.
They pay more.
The market adapts — but somebody absorbs the cost.
Brazil is competing with Europe, India and others for replacement tonnes
The new fertilizer map matters because replacement suppliers are not reserved for one region.
Egypt and Nigeria expanded urea exports after Gulf supply collapsed.
Europe increasingly needs alternative fertilizer as it reduces dependence on Russian and Belarusian supply and struggles with expensive domestic gas.
India remains a huge fertilizer importer.
African countries are also trying to increase regional procurement.
Brazil needs massive volumes every year.
The relevant question is therefore not simply whether enough fertilizer exists globally.
It is how many buyers are bidding for the same marginal tonne.
Brazil has enormous agricultural purchasing power.
But very high fertilizer prices can still change crop economics.
That matters globally because Brazil is not merely consuming food.
It is supplying soybeans, corn, sugar, coffee, meat and other agricultural commodities into international markets.
A fertilizer-price shock in Brazil can therefore become a food-price shock elsewhere.
The United States increasingly becomes part of the replacement supply system
The US is already gaining share in some international fertilizer markets as Gulf supply declines.
Its advantage is reinforced by continued growth in domestic gas production.
This has strategic implications beyond company earnings.
A world trying to reduce dependence on disrupted Middle Eastern nitrogen production needs regions capable of operating ammonia plants at high utilization rates.
North America is one of those regions.
CF Industries operated at 98% of available ammonia capacity during the first half.
US natural-gas production is still growing.
New LNG capacity demonstrates the depth of the resource base even as gas exports rise.
The result could be a long-term shift in fertilizer trade, not merely a temporary response to Hormuz.
If Europe continues losing ammonia capacity while North American output remains economically competitive, Atlantic fertilizer trade could become increasingly important.
That would make natural gas geology one of the forces redrawing the global agricultural system.
But phosphate does not follow the same gas story
The North American advantage is clearest in nitrogen.
Phosphate is different.
High sulphur costs caused by Middle Eastern disruption have hurt phosphate economics, and China's restrictions on DAP and MAP exports have tightened international availability.
This is one reason companies with heavy phosphate exposure have not benefited from the crisis to the same degree as nitrogen producers.
Reuters noted in May that Mosaic faced greater headwinds than CF Industries or Nutrien because higher sulphur input costs were offsetting some of the benefit of stronger fertilizer prices.
Nutrien reported a similar divergence: strong phosphate sales but weaker core phosphate profitability because of higher sulphur costs.
That means the Americas cannot be reduced to a simple "cheap gas equals fertilizer security" story.
Different nutrients have different supply chains.
Potash, phosphate and nitrogen respond to different geological, energy and trade constraints.
Logistics now matter almost as much as production
The global market's response to Hormuz proves that production alone does not determine fertilizer security.
Trade routes do.
Egyptian or Nigerian urea can replace Gulf material only if shipping, ports, finance and inland distribution work.
The same is true inside the Americas.
Brazil's record import volumes rely on major ports and long inland distribution networks.
US farmers rely on rail, truck and river transport.
This is where today's diesel shock becomes particularly relevant.
Record fuel prices increase the cost of moving fertilizer toward farms and moving crops away from them.
For the US farmer, expensive diesel therefore attacks the margin from both directions:
inputs cost more to deliver; crops cost more to transport.
The fertilizer itself can remain physically available while its economic burden continues rising.
The crisis increasingly becomes about allocation
The first phase of the Hormuz crisis was about physical tonnes.
Would enough urea leave the Gulf?
Would ammonia production continue?
Could importers replace missing cargoes?
We now have a partial answer.
More replacement supply existed than initially feared.
The next phase is about allocation.
Europe wants alternative nitrogen.
Brazil requires huge annual imports.
India needs fertilizer for an enormous agricultural system.
African governments want more secure regional supply.
North American producers have an incentive to sell wherever the netback is strongest.
That is how markets are supposed to work.
But it also means the world can be adequately supplied in aggregate while individual countries or farmers experience severe affordability stress.
Three paths through 2027
The benign path is straightforward.
Middle Eastern production and shipping recover substantially, Chinese phosphate exports normalize, gas remains plentiful in North America and new global capacity reaches the market.
Fertilizer prices continue declining during 2027.
North American producers retain a structural gas advantage but margins normalize.
Brazilian import costs ease.
Farm economics improve.
The difficult scenario is more subtle.
Physical supply remains available, but global fertilizer prices stay elevated.
North American producers continue operating profitably.
US farmers face an uncomfortable combination of fertilizer, diesel and transport costs.
Brazil continues importing the tonnes it requires but at prices that constrain margins and investment.
This scenario generates no dramatic worldwide shortage.
It could still affect planting, nutrient application and ultimately food prices.
The severe scenario combines renewed Middle Eastern disruption with persistent Chinese phosphate restrictions, stronger international gas prices and additional shipping or trade barriers.
The global market would again be forced to find replacement supply from North America, North Africa, Russia, China and other producers.
The Americas would split even more clearly between exporters with domestic resources and import-dependent agricultural economies.
Current evidence does not establish that this scenario will occur.
It establishes that the global system has become more dependent on a different group of suppliers.
The new fertilizer map
The most important lesson from the past six months is that the global fertilizer system proved more resilient than feared.
The Gulf lost enormous volumes.
Other countries increased production and exports.
Trade rerouted.
The world avoided the immediate physical fertilizer shortage that looked possible at the beginning of the crisis.
But the adjustment changed the geography of risk.
North America has emerged stronger as a nitrogen-production region because of its natural-gas advantage.
Brazil has demonstrated how vulnerable a huge agricultural exporter can be when fertilizer prices are set in an international market it cannot control.
US farmers have discovered that competitive domestic nitrogen production does not protect them from high fertilizer prices, record diesel costs or expensive transport.
And the global market increasingly depends on replacement exports from countries that now have more buyers competing for their output.
The crisis therefore did not disappear.
It changed form.
The world found replacement fertilizer.
It did not find cheap replacement fertilizer.
For the Americas, that creates two very different questions.
For North American producers:
How much of the world's replacement supply will they be asked to provide?
For the hemisphere's farmers:
What will that fertilizer cost by the time it reaches the field?