Texas Tech economist argues fertilizer prices driven by global shocks, not domestic market power

Darren Hudson, an agricultural economist at Texas Tech University, argued in a September 7 Agri-Pulse op-ed that U.S. fertilizer prices are primarily driven by global supply shocks and energy costs rather than domestic market concentration, pushing back against a narrative that has gained traction in Congress and among farm advocacy groups.

Hudson’s analysis pointed to the Strait of Hormuz disruption, which began in late 2025 and sent nitrogen prices to multi-year highs by April 2026, as the dominant factor behind the recent price surge. The crisis temporarily blocked or diverted ammonia, urea, and sulfur shipments from the Persian Gulf — a region that supplies approximately 20% of global traded nitrogen and the majority of traded sulfur.

The op-ed comes as the USDA fertilizer investigation nears completion, with farm groups pressing for greater pricing transparency and some lawmakers framing high fertilizer costs as a competition problem. Hudson contended that fertilizer is a globally traded commodity whose price is set by international supply-demand balances, not by the market share of any individual domestic producer.

He cited the rapid price correction since May — urea has fallen roughly 50% from its April peak and the Tampa ammonia contract has declined for four consecutive months — as evidence that markets are functioning competitively rather than exhibiting the pricing rigidity typically associated with concentrated market power.

Hudson acknowledged that fertilizer market structure has consolidated in recent decades, with Nutrien, CF Industries, Mosaic, and a handful of global producers holding large shares of North American capacity. He argued that consolidation alone does not prove anticompetitive pricing, and that the pattern of rapid price spikes followed by rapid corrections is consistent with a commodity market responding to external shocks.

Source: Agri-Pulse