Fertilizer Supply Disruption, Will U.S. Stock Agricultural ETF Inflows Reach Record Levels?

The conflict in the Strait of Hormuz is sending shockwaves through energy markets that are now spreading to the global food supply chain. Shortages of fertilizer raw materials, shipping disruptions, and Russian export restrictions are stacking up, creating a new wave of supply shocks for agricultural commodities. Goldman Sachs expects record-breaking inflows into agricultural ETFs this month.

Goldman analyst Jasmin Schneider recently stated that March 2026 is projected to be the strongest month for agricultural ETF inflows, surpassing the record set during the Russia-Ukraine conflict in March 2022.

Meanwhile, Goldman commodity analysts Lina Thomas and Daan Struyven warned in a report this week that the risks associated with the Strait of Hormuz could significantly impact global agricultural prices, with fertilizer supply disruptions potentially lowering crop yields and driving up food prices.

Former Russian central bank advisor Alexandra Prokopenko believes that food price shocks could become evident in global markets within six to nine months. Bloomberg macro strategist Simon White also pointed out that energy and fertilizer supply shocks pose a threat to the “second-round inflation effects.”

Supply Chain Pressure on Fertilizers, Rising Grain Prices

The Strait of Hormuz is a critical route for global nitrogen fertilizer trade. Goldman’s report highlights that this strait plays a central role in the global nitrogen fertilizer market, which accounts for 60% of worldwide fertilizer use, especially vital for crops like corn and grains.

Current supply pressures come from multiple directions. First, even though some ships have resumed passage, shipping congestion in the Gulf region continues to build, potentially taking weeks or longer to clear. Second, Qatar’s LNG export capacity was hit last week by drone or missile attacks from the Islamic Revolutionary Guard, and full recovery could take years—natural gas being a key raw material for nitrogen fertilizer. Third, according to Russia’s TASS news agency citing the agriculture ministry, Russia has suspended ammonium nitrate exports from March 21 to April 21 to secure domestic fertilizer supplies for spring planting.

Goldman analysts note that fertilizer accounts for about 20% of crop production costs. Disruptions in fertilizer supply could lower grain yields through two pathways: first, delayed or insufficient nitrogen application leading to reduced per-acre yields; second, farmers shifting to crop varieties that require less fertilizer, causing changes in planting patterns. Analysts also point out that the conflict occurs just before the planting season in the US, which is relatively protected, but European, Australian, and Southern Hemisphere farmers face greater exposure due to later crop calendars. Nonetheless, even if US farmers are somewhat insulated, global food prices are expected to influence the US domestic market.

Additionally, HSBC’s March 16 commodities report highlights another overlooked bottleneck—sulfur—that is experiencing a “super squeeze.” About 80% of sulfur is used to produce sulfuric acid, with roughly 60% of that flowing into fertilizer production. The US Geological Survey describes sulfur as “one of the most important elements in industrial raw materials through its main derivative, sulfuric acid.” HSBC’s report shows that before the Middle East conflict, sulfur prices had already risen sharply due to supply constraints and strong demand. The direct supply disruptions from the conflict combined with Hormuz shipping risks have pushed sulfur prices to “new record highs.”

Record Inflows into Agricultural ETFs, Market Focus on Trading Opportunities

Amid rising expectations of supply shocks, capital is rapidly flowing into assets related to agricultural commodities. Goldman analyst Schneider stated that the market volatility triggered by the Iran conflict closely resembles the intense swings in oil, gas, and energy markets during the Russia-Ukraine conflict in February 2022, and expects agricultural ETF inflows to hit record highs in the coming trading days.

From a technical perspective, the Bloomberg Agriculture Sub-Index has sharply retraced from its 2020–2022 rally to the 50% Fibonacci level, and has been consolidating sideways for nearly two years. Analysts believe that this pattern may signal a trend reversal in agricultural commodities as energy shocks evolve into fertilizer supply crises, potentially driving food prices higher in the second half of this year by suppressing crop yields.

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