FAO:
The initial market reaction to the Strait of Hormuz blockade was severe. Urea prices surged 56% above pre-conflict levels by mid-April. Ammonia and phosphate prices rose sharply alongside. Before the conflict, the waterway handled an estimated 20-30% of globally traded fertilisers and around half of all sulphur exports, a critical feedstock for phosphate production.
Markets have since adjusted. By early June, international urea prices had retreated to near pre-conflict levels, reducing immediate fears of a supply crisis.
Four factors drove the pullback. First, uncertainty and weak crop prices have made growers more cautious. Northern Hemisphere farmers had also already secured the bulk of their seasonal requirements. Second, relatively low US natural gas prices have weighed on urea production costs and pulled international prices lower. Third, China authorised new export quotas of around 1.5 million tonnes, adding expected supply and relieving market pressure. Fourth, fertilisers remain expensive relative to crop prices, cutting the incentive to buy forward and prompting some farmers to reduce application rates or defer purchases entirely.
The price retreat should not be read as a resolution. European nitrogen fertiliser prices remain around 30% above pre-conflict levels. Sulphur prices are still rising, ammonia is up 60%, and freight costs have increased 50%. The input cost environment remains difficult across the board.
Weaker demand almost certainly reflects financial strain on growers rather than genuine easing of need. The practical risk is a decline in fertiliser application over the next planting cycles, with lower cereal yields possible in the second half of 2026 and into 2027. Nitrogen-dependent crops are most exposed.
El Nino compounds the outlook. Forecasters assign a high probability to an El Nino event developing and persisting through 2026, bringing the prospect of drought, heat stress, and disrupted rainfall across key producing regions. If reduced fertiliser use coincides with El Nino-driven production losses, the combined effect on agricultural output and food prices in 2027 could be material.
Regarding the latest policy adjustments for **ammonium chloride** exports from China:
1. Total export volume is not specified; in principle, it will follow last year's export volume (2.31 million tons exported in 2025).
2. Minimum export price: Powder: FOB $100/ton; Granular: FOB $115/ton.
3. Export quotas will be granted to companies with good self-discipline (16 companies). Trading companies must also source from these companies if they wish to export. Specific quotas have not yet been issued (pending NDRC approval).
4. Quotas will be adjusted every six months.
5. The inspection process remains unchanged. Those with quotas can use the "green channel," and the inspection time may be shortened to around ten days (to be confirmed).
6. Inspection period: July 2026 – June 2027
In China, CNAMPGC sold Gran Urea @ USD 480 FOB
Most are thinking that the price level may be lowered to USD 450 FOB
**Direct Hedge – Daily Fertilizer Market Update** (see Vantage section)
Friday, 12 June 2026
Urea sentiment remains under pressure, with liquidity still thin and buyers reluctant to step in despite the sharp fall in values. Brazil remains central, with importers still in no rush while offers have fallen sharply and supply remains available from several origins. Nola remains weak around pre-conflict levels, while derivatives traded Urea Brazil in the 465–488 range and Nola Q3 at 408–410.
*Latest derivative levels*
*International Markets*
*Arab Gulf Urea (fob) – latest index 422.5 (-132.5)*
– *June:* $450 / $500 →
– *July:* $440 / $500 →
*Egypt Urea (fob) – latest index 485 (-115)*
– *June:* $460 / $520 ↓
– *July:* $460 / $500 ↓
*Brazil*
*Urea Brazil (cfr) – latest index 460 (-75)*
– *June:* $460 / $500 →
– *July:* $480 / $490 →
– *Aug:* $470 / $490 →
– *Sep:* $440 / $480 →
– *Oct:* $440 / $480 →
*Ammonium Sulphate Brazil (cfr) – latest index 232.5 (+2.5)*
– *June:* $230 / $250 →
– *July:* $230 / $250 →
– *Aug:* $230 / $250 →
*MAP Brazil (cfr) – latest index 900 (unchanged)*
– *June:* $880 / $910 →
– *July:* $880 / $910 →
– *Aug:* $880 / $920 →
*US Markets (NOLA)*
*NOLA Urea (paper)*
– *June:* 380 / 430 ↓
– *July:* 395 / 405 ↓
– *Aug:* 400 / 410 ↑
– *Sep:* 400 / 410 ↑
*NOLA DAP (paper)*
– *June:* 780 / 795 →
– *July:* 775 / 790 →
– *Aug:* 775 / 790 →
– *Sep:* 775 / 790 →
*NOLA UAN (paper)*
– *June:* 490 / 510 →
– *July:* 490 / 515 →
**FALCON PAPER VALUES/FORWARD CURVE**
NFL issuing counters to all tender participants brought further support to Int'l Urea paper y'day, as trading activity focused July Brazil again. In Nola, June phys traded $385 at start of day to recover $10, while Q3 paper traded up to $410 before values fell back to $400. Mkts framed:
*AG*
Jun $455//$500
Jul $470//$520
*Cfr Brazil*
Jun $450//$500
Jul $488//$500 – traded $465, $488
Aug $465//$490
Sep $450//$490
*Egypt*
Jun $520//$570
Jul $490//$540
*cfr Brazil AS*
Jun $225//$248
Jul $200//$230
Aug $210//$240
*FOB China (Compacted) AS*
Jun-Jul $220//$240
*Nola Urea*
Phys: Loaded traded $405, June $385, $395
Paper:
Jun $400//$425
Jul $398//$408
Aug $395//$405
Sep $400//$415
Oct $400//$415
Q3 $398//$410 – traded $408, $410, $400 (1k/m)
Q4 $405//$415
Dec traded $418 (500st)
Q1 $405//$425 – traded $430 (500st)
*DAP Nola*
Jun $765//$790
Jul $775//$785
Aug $775//$785
Sep $775//$785
*MAP Brazil*
Aug $900//$925
Sep $890//$910
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**China Morning Brief**
Urea
The domestic Chinese urea market was largely flat on Wednesday. New orders went largely unsupported and export guidance price rumours continue to circulate, though market expectations for shipments have faded. Price inversions are emerging in some regions and downward pressure on company quotations looks set to continue.
Synthetic Ammonia
The domestic synthetic ammonia market was broadly stable with pockets of volatility. Low utilisation rates downstream kept producer sales moderate, with the emphasis on working down inventory. In some regions, limited external buying has raised expectations around a phosphate sector restart, which could provide price support. Northern markets remain under low-price pressure with further downside possible at higher levels.
Ammonium Chloride
The domestic ammonium chloride market continued to weaken. Compound fertiliser manufacturers remain cautious buyers and demand is constrained. As restarted capacity adds to supply pressure, the market is operating near lows. Export policy developments warrant monitoring.
Ammonium Sulphate
The ammonium sulphate market was stable. Persistent weakness in international urea prices has kept end-user buying prices flexible and purchasing sentiment low, with most activity driven by immediate need. Without a demand catalyst, the market is expected to remain range-bound in the near term.
Phosphates
The domestic MAP market was relatively stable. In Hubei, mainstream factory prices for 55% powder held at CNY 4,350-4,400/tonne, with supply-side offers at CNY 4,200/tonne and most orders in a holding pattern. Downstream appetite for higher-priced material was limited. Rising sulphur costs are keeping trading relatively active with a modest upward bias possible.
The DAP market was subdued and cautious. Raw material costs remain elevated despite some relief from affordable sulphur, and demand is sluggish with few new orders placed. The market is expected to remain quiet and stable in the short term.
Potash
The domestic potash market showed little change. Trader inventory is lean but sellers are keen to move stock. Import prices for 60% Lao potash were mostly in the CNY 3,050-3,300/tonne range, with deals concluded selectively. The sulphate of potash market is loss-making and production operating rates continue to slide.
Compound Fertilisers
The domestic compound fertiliser market was stable. Nitrogen and potash inputs saw narrow moves while phosphate ammonium tightness and firm prices are complicating new-season wheat fertiliser pricing for producers. Some regions are still finalising summer fertiliser supply. Autumn product has only been tentatively introduced in select markets. Near-term trading sentiment is expected to remain cautious with prices subject to modest adjustment within a stable range.
Offers for Urea in the UK for July-September delivery fell to GBP 530 in bag del farm (approx. USD 640/t cfr bulk).
Offers for gran urea in Brazil heard at usd 440-450cfr
**El Nino Declared: Record-Breaking Extreme Weather Predicted**
The US National Oceanic and Atmospheric Administration (NOAA) has officially confirmed the arrival of El Nino, driven by significantly warmed waters in the equatorial Pacific Ocean. Meteorologists warn that this natural warming cycle is highly likely to amplify existing global heating caused by fossil fuel pollution, with a 63 percent chance of becoming one of the strongest events recorded since 1950. Experts anticipate it could rival the devastating 1997 El Nino, which caused billions of dollars in global damage.
Key Regional Impacts
The consequences of this climate event vary significantly by geography:
Australia, India, and Hawaii: Facing heightened risks of extreme heat, severe droughts, and bushfires.
South America and Northeast Africa: Expecting intense rainfall, flooding, and potential weather whiplash shifting from drought to heavy storms.
United States: Likely to experience a wetter winter across the South alongside a warmer, drier Pacific Northwest. While this can occasionally benefit agriculture, the overall temperature increase tends to slow down American economic growth.
Future Outlook
The current El Nino is projected to peak during the autumn or winter. Because its planetary heating effects operate on a delay, multiple climate scientists predict that 2027 will become the hottest year on record. United Nations Secretary-General António Guterres has labelled the situation an urgent climate warning, while experts emphasise preparation over panic as these intense conditions develop.
**Weekly Freight Update by Nexus**
In the Far East and South East Asia, it has been another strong week, with rates continuing to rise. Prompt tonnage, particularly in the Supra/Ultra segment, remains thin. While last week was relatively quiet, there has been an uptick in cargoes creating more activity across the basin. Most notably, backhaul steel cargoes have increased, with some commanding sizable rates. This has been further supported by strong Australian and Nopac activity, helping to push rates higher against a tight tonnage list. The basin continues to hold its firmness and, with a steadier flow of cargo now emerging, more players are becoming confident that the current momentum can be maintained going forward.
The Indian Ocean market remained quiet this week, with activity levels continuing to be subdued. The recent escalation in the conflict has heightened nerves in the region and led to a further increase in insurance costs. While a handful of salt cargoes from WCI and some fertiliser shipments out of the Red Sea were concluded, there was little else of note to report. Further south, rates in South Africa softened. Cargo flows have not been helped by the derailment of a coal train supplying Richards Bay, adding further pressure to an already quiet market. Overall, it has been a soft week across the region.
The Continent and Mediterranean markets remained largely flat this week. While there was still some demand, the gap between owners’ ideas and charterers’ expectations remained wide. Fronthaul cargoes continued to trade at a discount given the strength of the Pacific market, while the usual scrap and clinker movements kept regional tonnage employed, with many owners preferring to stay within the basin and wait for stronger rates to emerge.
The USG had another strong week and was the driving force behind some of the larger numbers seen across the Atlantic. Ultramax tonnage remains relatively tight, allowing rates to continue to rise. One notable trend has been the increase in transatlantic runs, which are currently commanding some of the strongest returns. Many owners' preference seems to be for longer fronthauls, particularly while the Pacific market continues to perform well. On the handys though, the market is slightly more balanced, with rates rising at a slower pace and more owners openly discussing ballasting from the West Mediterranean. An increasing number of vessel circulations are now being seen with ETA guidance for the US and South America, suggesting owners are already positioning themselves for opportunities in the region.
Further south, the market has not been as strong as the USG, but an increasing level of enquiry has resulted in an encouraging week for the Atlantic basin. More cargoes were seen across all vessel sizes, pushing rates higher on the Supra/Ultra segment and helping absorb some of the excess Handysize tonnage. However, given the oversupply of Handies coming into the week, rates for the smaller vessels have seen only limited movement. Across the Atlantic, the West African market has become increasingly divided. A significant gap has emerged between Supramax and Ultramax rates, with Ultramaxes commanding substantial premiums due to stronger opportunities in ECSA. As a result, charterers are having to pay up to secure suitable tonnage. There has also been a notable increase in Handy fronthaul cargoes, which remain in demand from owners due to the strength of the Pacific market.
Bunker prices have eased across most locations this week despite renewed tensions between the US and Iran. Singapore is currently trading around USD 760 and Gibraltar around USD 700, while Fujairah remains significantly higher at approximately USD 1230. However, as was the case last week, owners continue to suggest that actual bunker prices in Fujairah are above reported levels due to limited spot availability.
**PAPER FORWARD CURVE BY FALCON**
Following price discovery in NFL tender (L1s $444.90 ECI & $449.30 WCI) and counters issues up to L3 on each coast, Urea paper reacted by seeing bid support return, with activity focused on Nola & Brazil contracts. Aug-Sep Nola traded shy of $410, Q4 traded $412.50, and Q1 values moved up to $430 ($400 on Mon), while July Brazil saw activity in $465-$470cfr range.
*AG*
Jun $455//$500
Jul $450//$500
*Cfr Brazil*
Jun $450//$500
Jul $450//$470 – traded $470 (1,5k), $465, $466 (2.5k)
Aug $440//$485
Sep $435//$485
*Egypt*
Jun $540//$600
Jul $475//$540
*cfr Brazil AS*
Jun $230//$248
Jul $220//$245
Aug $220//$250
*FOB China (Compacted) AS*
Jun-Jul $225//$245
*Nola Urea*
Phys: Loaded traded $400, $410, $405
Paper:
Jun $400//$425
Jul $390//$400 – traded $408, $402, $395, $396
Aug $395//$405 – traded $410
Sep $390//$400
Oct $395//$407
Q3 $395//$405
Q4 $400//$410 – traded $412.50, $410
Q1 $405//$425 – traded $430 (odd vols)
*DAP Nola*
Jun $765//$790
Jul $775//$785
Aug $775//$785
Sep $775//$785
*MAP Brazil*
Aug $905//$930
Sep $890//$910
**Sulphur**
Kazakhstan's leading sulphur producers Tengiz and Kashagan are rerouting significant volumes via Georgian ports, principally Batumi and Poti, following tightened logistics restrictions on the Caspian route. Total overland transport costs from Kulsary and Karabatan to Batumi via ferry are reported to have doubled versus previous routing. The shift underlines the growing strategic relevance of the Trans-Caspian International Transport Route (TCITR) as Caspian corridor disruptions persist. For exporters the consequence is higher landed costs, offset by more reliable access to Turkish, European and Mediterranean markets.
MOPCOhave been linked to 2 sales of gran urea, 15kt and 5kt at USD 475 FOB for loading end June/H1 July to Europe.
**INDIA UPDATE**
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<p class="font-claude-response-body break-words whitespace-normal">Sun International has also been countered to L4, Sun submitted L3 at USD 450.25/t CFR ECI and L2 at USD 450.35/t CFR WCI. Four suppliers now hold L4 positions:
Aditya Birla (ABGT) 500,000t to ECI and 600,000t to WCI;
Midgulf International (MGI) 500,000t to each coast;
Ameropa Asia 185,000t to ECI and 234,000t to WCI; and
Sun International 100,000t to each coast.
The revised total volume countered to L4 stands at 2.72 million t, comprising 1.29 million t for ECI and 1.43 million t for WCI, against a total requirement of 1.7 million t. (Source: Acerto, 11 June 2026)</p>
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