Phosphate is one of the main nutrients in fertilizer. To make it, companies need sulfur, and sulfur has to cross a lot of ocean to reach Mosaic, the biggest US phosphate producer, based in Tampa.
A lot of that sulfur moves through the Strait of Hormuz. With that waterway closed because of the Iran war, sulfur prices have gone from bad to worse.
CEO Bruce Bodine put it plainly: "The ongoing Strait of Hormuz closure and the more recent Kazakhstan blockade continue to impact the global flow of sulfur, and spot prices remain unsustainably high."
Almost half of global sulfur trade involves countries exposed to a Hormuz disruption, so this is a problem for the whole industry, not just one company.
Mosaic has been cutting output to control costs, but those cuts have not been enough. The second-quarter numbers show how much the cost spike hurt.
Sulfur costs tell the story. Mosaic paid an average of $522 per long ton in the second quarter, up from $379 per long ton in the first quarter.
A long ton is a weight measure used in bulk shipping. Mosaic has already settled third-quarter sulfur contracts at $705 per long ton.
Its Faustina, Louisiana, plant remains fully idle.
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Its Bartow, Florida, site is running at 40% of its target annual rate.
Earlier this year, Mosaic idled about one million tons of Brazilian phosphate output. It made further cuts in July.
"We have curtailed production in the US and Brazil simply because phosphate industry economics cannot accommodate current sulfur prices," Bodine said.
Mosaic and other North American fertilizer producers are dealing with soft demand. Farmers who are still feeling inflation pressure have been putting off buying crop nutrients, so fertilizer makers cannot simply pass the whole cost along.
The price surge has drawn closer scrutiny from Washington. The Trump administration has intensified its antitrust review of fertilizer makers, a government look at whether the market is competitive.
In June, the White House suspended tariffs on phosphate from Morocco for eight months, or until the fertilizer-availability emergency it declared comes to an end. The goal was to help farmers with costs.
Mosaic had petitioned for those duties about five years earlier, so the company that asked for the tariffs now has to wait. The emergency declaration tied to the suspension has an August 5, 2026 end date unless it ends sooner.
Bodine says the tariff pause has not changed US phosphate prices. With overseas prices so high, he said, there is "little incentive for producers to send fertilizer to the US."
He is "confident" the duties will be reinstated after the suspension ends. Bloomberg Green Markets data from July 31 shows spot prices in New Orleans for diammonium phosphate, a common phosphate fertilizer, at their highest in about a year.
Not every fertilizer company is in the same boat. Nutrien and CF Industries, both nitrogen-focused rivals, posted strong quarters while fertilizer prices spiked.
The pain is concentrated on the phosphate side of the market.
This is a story about supply chains, not just crop science. A shipping lane on the other side of the world can raise the cost of making fertilizer, and that cost eventually shows up in earnings.
For your portfolio, the key is which companies are exposed. Mosaic has plants idled or slowed in two states and in Brazil, and it is waiting on a tariff decision.
Higher fertilizer costs can also spread to your grocery bill over time.
But for investors, the bigger point is that fertilizer is not one industry. It is several businesses, and right now they are moving in very different directions.
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