Feodora Chiosea/iStockPhoto / Getty Images
Oil isn’t the only commodity that’s been hit by the closing of the Strait of Hormuz. The world’s fertilizer supplies are also among the casualties.
About one-third of global seaborne fertilizer trade, or 16 million tonnes per year, passes through the narrow waterway. Like oil, that’s now reduced to zero.
The main producing countries, Saudi Arabia, Qatar, and the United Arab Emirates, have all come under fire from Iran as the war rages. With the strait closed, fertilizer prices are moving higher.
The world hasn’t taken much notice yet, but farmers, who are now preparing for spring planting, are already feeling the squeeze. Grocery store customers will experience it as new crops come to market.
The recent potash spot price was US$372.50 per tonne, representing a roughly 17-per-cent increase year-over-year. That’s a long way from the highs of over US$1,200 reached in April, 2022, but the price is expected to increase significantly as the impact of the strait’s closing takes hold.
Canada exports about half of its fertilizer output and up to 90 per cent of its potash to the United States. That makes us an alternative for buyers whose Middle East supplies are cut off, providing supply chain disruptions can be overcome.
The world’s largest producer of agricultural fertilizers is Saskatchewan’s Nutrien Corp., which we recommended in my Internet Wealth Builder newsletter in 2020. Here is an update.
Nutrien Corp. (NTR-T)
Originally recommended on Aug. 10/20 at $44.83. Closed Friday at $114.15. All dollar figures except share price in U.S. currency.
Background: Nutrien, formed in 2018, it is the largest global producer of potash and a top-tier producer of nitrogen and phosphate. The company has a massive retail network of 2,000 stores across North America, South America, and Australia. It has roughly a 20-per-cent share of global potash sales and is the largest U.S. retailer of agricultural products, including fertilizers, crop chemicals, seeds, and other services to farmers.
Performance: The shares are up about 11 per cent since the war broke out and are 155 per cent higher than their recommended price.
Recent developments: Nutrien’s business was doing well long before the Iran war began. Fourth-quarter and year-end results for 2025 saw significant improvement over the previous 12 months, although some results were below estimates.
Fourth-quarter sales were $5.34-billion, up 5 per cent from the same period the year before. (The company reports in U.S. dollars). Net earnings were $580-million ($1.18 per diluted share) compared to $118-million (31 cents per share) the year before. Earnings per share were 8 per cent below consensus, with revenue and adjusted EBITDA each about 1 per cent and 3 per cent under estimates, respectively. The shortfall was owing to softer pricing and volumes.
For the full year, Nutrien saw sales rise 4 per cent to $26.9-billion. Net earnings were $2.3-billion ($4.66 per share), up from $700-million ($1.36 per share) in 2024.
“2025 was a defining year for our company, with exceptional performance across all our operating segments and a reduction in cost and capital expenditures that surpassed our targets. Alongside delivering structural free cash flow growth, we took decisive actions to optimize our portfolio, strengthen our balance sheet, and increase cash returns to shareholders,” chief executive officer Ken Seitz said.
Dividend and buybacks: Nutrien pays a quarterly dividend of 55 US cents a share (US$2.20 a year) to yield 2.7 per cent at the recent U.S. trading price of US$82.85 or $C114.15 on the Toronto Stock Exchange.
It is also actively buying back stock, spending $551-million in 2025 to repurchase approximately 2 per cent of shares outstanding. Nutrien’s board approved the purchase of up to 5 per cent of outstanding common shares over a twelve-month period through a new normal course issuer bid.
Outlook: The company forecast flat-to-modest declines in sales of potash, nitrogen, and phosphate in 2026. But that was before the Middle East war broke out. No revised sales forecasts have been issued since, but demand is expected to increase substantially as prices rise now that up to a third of world fertilizer supply is bottled up in the Persian Gulf.
Bottom line, this is a profitable world-class company with a respectable dividend. The developments in the Middle East should serve to enhance its value.
Action now: Buy for the sustainable dividend and the prospect of a continued rise in the share price if the war goes on for any length of time.
Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.