Goldman Sachs forced to admit error, significantly raising forecasts—the severity of this fertilizer crisis has far exceeded Wall Street's initial judgment.
As the blockade of the Strait of Hormuz enters its seventh week, the volatility in the global fertilizer market is exceeding everyone's expectations—including Goldman Sachs itself. On April 14, analyst Duffy Fischer of Goldman Sachs' Americas Agriculture Equity Research team led a new research report, formally admitting their conservative stance and comprehensively raising earnings forecasts for the fertilizer sector. The core conclusion of the report is straightforward: nitrogen fertilizers are the chemical industry chain most severely impacted by this conflict, with global urea prices surging 50% to 70% since the outbreak of the conflict (varying by region). Fischer stated directly that the &#34;severity of this shock exceeded our initial expectations,&#34; representing not just price anomalies but a concentrated release of structural supply crises.
For investors, Goldman Sachs pointed to two clear beneficiaries: US-based nitrogen fertilizer producers CF Industries (CF) and Nutrien (NTR). Due to relatively stable domestic natural gas prices in the United States, the cost advantage of these two companies has become unprecedentedly prominent.
However, this crisis is not without losers. Sulfur prices have skyrocketed to historical highs, severely impacting phosphate fertilizer producers—Mosaic (MOS) announced on April 8 the closure of two phosphate mines in Brazil and expects to record a pre-tax book loss of $350 million to $400 million in the first quarter of 2026. Goldman Sachs' judgment hit the nail on the head: how long the conflict lasts is the most critical and uncertain variable in all valuation adjustments.
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<h2>Nitrogen Fertilizers: The Most Impacted Chemical Chain Globally</h2>
The Goldman Sachs research team pointed out that the Middle East possesses the world's cheapest natural gas resources, forming a massive nitrogen fertilizer production base. Since the region engages almost no agricultural production, nearly all products are exported. This structural characteristic makes nitrogen fertilizers the fertilizer variety most affected by this conflict.
Specifically, urea produced in Iran, Qatar, and Saudi Arabia accounts for approximately 35% of global trade volume, and exports of these products must pass through the Strait of Hormuz.
Additionally, products from Egypt account for about 5% of global trade volume. While they do not need to pass through the strait, they rely on Israel's natural gas supply. Currently, Egypt states it has sufficient natural gas to maintain industrial production until summer, so this portion of output is currently not at risk. In terms of ammonia trade, approximately 15% to 20% of global ammonia trade also passes through the Strait of Hormuz for transport.
More than seven weeks have passed since the conflict broke out, and shipping traffic through the Strait of Hormuz has fallen into paralysis. This not only directly impacts the production side but, due to the long sea freight cycle from the Middle East to destinations, substantial risks of cargo shortages are continuously accumulating. Fischer specifically warned in the report: even if the strait is eventually reopened, full normalization of prices will take several months; therefore, the timing of conflict resolution will have a significant impact on CF and NTR's earnings for the current fiscal year.
<h2>Phosphates and Sulfur: A Cost Spiral Is Forming</h2>
Phosphates are the second-largest fertilizer variety affected by this conflict.
Regarding international benchmark prices, diammonium phosphate (DAP) prices in the Brazilian and Indian markets have risen by approximately 25%, while domestic DAP prices in the United States have increased by about 20%. Previously, US farmers had held a wait-and-see attitude toward high phosphate prices; the continuously rising cost pressure has suppressed demand-side momentum, but the tight situation on the supply side has not been alleviated.
Sulfur is a key raw material for phosphate fertilizers. Approximately 40% to 45% of global traded sulfur must pass through the Strait of Hormuz. Compounded by previous constraints on Russian exports and growth in non-fertilizer industrial demand, the sulfur market was already quite tight before the conflict broke out, and now prices have reached historical highs.
Goldman Sachs pointed out that as second-quarter sulfur contract prices are finalized, domestic US DAP prices will need further increases to absorb the inflationary pressure from upstream raw material costs.
Phosphate producer Mosaic (MOS) announced on April 8 the closure of two phosphate mines in Brazil and plans to sell Araxa assets, expecting related measures to result in a pre-tax book impact of $350 million to $400 million in Q1 2026. Consequently, Goldman Sachs lowered its FY2026 EBITDA forecast for MOS by 9% to $1.95 billion, but maintained a Buy rating, slightly reducing the 12-month target price from $32 to $31.
<h2>Potash: Currently Calm, But Watch for Demand Crowding Effects</h2>
Compared to the violent fluctuations in nitrogen and phosphate fertilizers, the potash market remains calm for now.
Potash production in the Middle East (mainly from Israel and Jordan) is primarily exported via the Red Sea and has not yet faced any restrictions; North American potash supplies remain ample.
Goldman Sachs believes there is no reason in the short term to adjust expectations for potash prices. However, the research team highlighted a potential demand-side risk: soaring prices of nitrogen and phosphate fertilizers may force farmers to prioritize allocating limited agricultural input budgets to nitrogen fertilizers, thereby suppressing purchasing willingness for potash—especially considering that last year's potash application rates were already relatively adequate, and potash has historically ranked third in procurement priority.
Goldman Sachs emphasized that the most critical variable currently is the duration of the conflict. As long as the Strait of Hormuz remains blockaded, fertilizer prices and earnings expectations for related companies will face continuous upward pressure.

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With the Strait of Hormuz blockaded for seven weeks, global urea prices have surged 50%-70%. Goldman Sachs has been forced to admit error, stating directly that this shock's "severity exceeded our initial expectations," while comprehensively raising earnings forecasts for the fertilizer sector. The intensity of the nitrogen supply crisis far surpasses expectations, with CF Industries and Nutrien emerging as the biggest winners; sulfur prices have skyrocketed to historical highs, prompting Mosaic to shut mines to limit losses. When the conflict ends remains the ultimate variable determining valuations across the entire sector

- Goldman Sachs has significantly revised its fertilizer market forecasts due to an unprecedented impact from the ongoing conflict, particularly affecting nitrogen fertilizers.  
- The bank identified CF Industries and Nutrien as key beneficiaries, while Mosaic faces losses due to soaring sulfur prices, which have reached record highs and disrupted phosphate production.  
- The duration of the conflict is critical, as continued closure of the Strait of Hormuz will place upward pressure on fertilizer prices and corporate earnings expectations.

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Fertilizer Crisis Spirals Out of Control? Goldman Sachs Admits Underestimation: Nitrogen Fertilizers Face Most Severe Shock, Urea Prices Surge 70%