The ongoing conflict in the Middle East between Iran and Israel and the United States has roiled global energy markets, causing global fertilizer prices to surge by more than 25 percent since the beginning of March. Brazil, Latin America’s top producer of agricultural products, imported more than $15 billion in fertilizer in 2025. Which countries in Latin America and segments of the region’s agribusiness sector are most exposed to rising input and logistics costs? To what extent do higher fertilizer and energy prices threaten production, crop choices and export competitiveness in key agricultural economies such as Brazil and Argentina? How might the current shock lead to longer-term shifts in Latin America’s role in global food markets?
Maria Luisa Franzotti, agribusiness analyst at Céleres: “In Latin America, Brazil is the most exposed to the conflict in the Middle East. The world’s fourth-largest fertilizer importer, it has sourced an average of 70 percent of its demand from imports over the past three years, with 17 percent of its nitrogen-based fertilizers coming from that region in 2025. Argentina, the world’s third-largest food exporter, meets roughly 50 percent of its fertilizer demand through imports, with the Middle East accounting for 26 percent of its nitrogen-based fertilizers in 2025—putting pressure on wheat, corn and barley production. Paraguay and Uruguay, though smaller, are similarly vulnerable, particularly due to rising phosphate prices. Export restrictions from China and Russia are tightening global supply and intensifying the shock to the effective operating cost of these economies. In Brazil, low soil fertility and acidity amplifies the impact. With margins under pressure since 2023—due to higher fertilizer costs, unfavorable exchange rates and elevated interest rates—the 2026-27 crop season is likely to see slower area expansion. Corn, often used to offset weaker soybean margins, is more nitrogen-intensive, limiting this alternative. In Argentina, rising costs are eroding the competitiveness of soybean and derivative exports. In the medium to long term, the shock could reshape Latin America’s role in global food markets, with a shift toward crops that are less fertilizer-intensive. Higher costs reduce competitiveness in the short term but may ultimately reinforce the region’s strategic importance. Investment in fertilizer production is essential at this stage to reduce dependence on, and vulnerability to, external conflicts.”
Gabriel Diniz Faleiros, research analyst for Latin America agribusiness at S&P Global Energy: “The Middle East conflict has increased prices for fertilizers and agricultural machinery across Latin America. In Brazil, nitrogen fertilizer prices have risen sharply, with granular urea CFR Brazil up more than 50 percent from late February to late March. This spike reflects Brazil’s dependence on Middle Eastern suppliers, which account for 26 percent of its urea and ammonium sulfate imports on a five-year average. Consequently, margins for summer corn have turned negative, likely prompting a shift in planted area toward soybeans. For soybeans, we forecast the smallest area expansion in nearly 20 years, driven by multiple factors, including deteriorating economics for pasture conversion. Margins for converting pasture into farmland are currently negative, and the barter ratio for MAP fertilizer has worsened significantly, though potassium chloride remains relatively stable. Despite these headwinds, we do not expect area retraction, as margins in established soybean areas remain positive even under oil-shock scenarios. However, there are growing concerns about fertilizer availability during the September-November planting season due to export restrictions from the Middle East and other major suppliers. This could lead to lower fertilizer usage. Argentina’s wheat sector faces immediate pressure, with variable costs up 14 percent while gross revenue remains flat. This margin compression threatens upcoming plantings and could affect production.”
Maísa Romanello, market analyst on the Market Intelligence team at Safras & Mercado: “The immediate impact is being felt in production costs for winter crops such as wheat in Argentina and Brazil. In Brazil, amid credit constraints and high prices since last year, many farmers delayed purchases and now face an even more unfavorable situation as fertilizer prices surge due to the conflict. Agricultural output could be threatened if farmers are unable to absorb higher fertilizer costs. Reduced nutrient application in fields may lead to lower yields. The 2026-27 crop cycle is already a growing concern, particularly due to high prices for phosphate fertilizers. Production costs are expected to rise, squeezing margins, while terms of trade have worsened—grain prices have not kept pace, while fertilizer costs have surged. For the second crop (safrinha), the main concern is urea. The longer the conflict persists, the greater the likelihood that prices will remain elevated during peak demand, undermining nitrogen fertilization. All of this could result in lower input use in farming, reduced output and higher food prices.”
Mariangela Hungria, agronomist, soil microbiologist and researcher at Embrapa Soja: “Conflicts such as the recent one in the Middle East are devastating, especially because of the lives lost. Regarding the effects on Brazilian agriculture, they will have a major impact, both on the cost and supply of inputs, as well as on food exports. However, difficulties also bring opportunities. For those who, like me, work with biological inputs as a substitute for chemical ones, the transportation constraints during Covid-19 and the disruption in fertilizer supply caused by the war between Russia and Ukraine represented a major opportunity for the sector. Faced with shortages of chemical inputs, farmers decided to test biologicals and were able to confirm what research had long demonstrated—that biologicals are effective and can support high yields. As a result, from 2020 onward, there was an explosion in the use of bioinputs. Once farmers see results, adoption tends to increase steadily. We are now facing another conflict, which will once again significantly constrain the supply and increase the cost of fertilizers and chemical molecules for pest and disease control. Nevertheless, this also represents a new opportunity for the expansion of biologicals, which are produced in Brazil and based on its rich biodiversity. I hope that this second warning regarding the heavy external dependence on chemical inputs for agriculture, alongside the strong opportunity for developing biologicals in Brazil, becomes clear to all sectors. This should lead to the necessary incentives to consolidate the biologicals market in the country. With this, not only will production costs be significantly reduced, but we will also move toward a more sustainable agriculture, with lower environmental impact.”
João Victor Marques Cardoso, oil, gas and biofuels analyst at the Center for Energy Studies at the Getulio Vargas Foundation: “Brazil’s agricultural sector is a major energy consumer, accounting for 5 percent of national energy demand. Diesel is the main fuel, representing approximately 50 percent of the sector’s energy use. An external shock in the international oil market has significant effects, particularly for a country that relies on up to 30 percent imported diesel. The impact is especially pronounced in the Center-West agricultural frontier, with higher fuel costs passed through to food prices in both domestic and global markets. Brazil’s predominantly road-based freight transport system, which moves agricultural output, is also affected by increases in diesel prices. Fuel has a significant weight in Brazil’s official consumer price index (IPCA), making the impact on inflation unavoidable. Brazil is even more vulnerable on fertilizers, as 80 percent of its consumption is imported. One of the world’s largest food exporters, Brazil accounts for 8 percent of global fertilizer consumption. The impact is felt both through the risk of disruptions to maritime navigation and through rising natural gas prices, a key input in fertilizer production. The current shock is likely to drive greater investment aimed at reducing import dependency, which has become a structural vulnerability for Brazil and Latin America. It is essential that investments in oil refining, gas processing and fertilizer production are integrated, leveraging regional advantages such as more competitive gas from Bolivia and Argentina. These resources could then be leveraged into strategic value chains like fertilizers, thereby fostering the development of Brazil’s gas market.”
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