Fertilizer Prices and Natural Gas: Why Farm Inputs Follow Energy

Published September 25, 2026

Crops need three main nutrients: nitrogen (N), phosphorus (P) and potassium (K). They are often mentioned in one breath - the NPK on every fertilizer bag - but they come from completely different supply chains. Nitrogen is made from natural gas, phosphate and potash are mined. That is why the prices of urea, DAP and potash sometimes move together and sometimes go their own way.

Nitrogen: fertilizer made from gas

Almost all nitrogen fertilizer starts as ammonia, produced by combining nitrogen from the air with hydrogen - and that hydrogen is mostly taken from natural gas. Gas is therefore both the raw material and the energy source, and it makes up the large majority of an ammonia plant's running cost. Urea, the world's most widely traded nitrogen fertilizer, is made from ammonia and contains 46% nitrogen. The result: when gas gets expensive in the regions where the last, most expensive tonnes of ammonia are produced, urea follows.

2021–22: what a gas shock does to fertilizer

The clearest recent example came when European gas prices soared in late 2021 and again after Russia's invasion of Ukraine in 2022. Several European ammonia plants cut output because running them no longer paid, and export restrictions elsewhere tightened supply further. According to World Bank data, urea rose from about 265 dollars per tonne in January 2021 to 925 dollars in April 2022 - roughly three and a half times as much. The natural gas price on this site is the US Henry Hub benchmark, which rose far less in that period; European prices climbed to several times the US level. That gap is exactly why a gas shock in one region can move fertilizer prices worldwide: fertilizer is traded globally, gas mostly regionally.

Phosphate and potash: mines and geopolitics

Phosphate and potash are not made from gas but mined, and their deposits are unusually concentrated. According to the US Geological Survey, Morocco and Western Sahara hold about two-thirds of the world's known phosphate rock reserves, while Canada, Russia and Belarus together produce well over half of the world's potash. That concentration makes both markets sensitive to policy: China tightened exports of phosphate fertilizers from late 2021, and sanctions and transit restrictions on Belarusian potash in 2021–22 removed a large supplier from Western markets. Potash climbed from about 255 dollars per tonne in January 2021 to 1,202 dollars in April 2022 (World Bank). DAP sits in between: it combines phosphate with ammonia, so it carries part of the gas cost as well.

From fertilizer bill to crop price

What matters to a farmer is not the fertilizer price alone but how much of it a tonne of grain can buy - the pages for wheat and corn show this ratio against urea. When fertilizer gets expensive relative to crops, farmers apply less. Phosphate and potash are easier to skip for a season, because soils hold reserves; cutting nitrogen usually shows up in that same season's yield. Lower application rates can mean smaller harvests and firmer crop prices later, but only partially and with a delay: fertilizer is often bought months before it is spread, and weather, stocks and demand weigh just as much. High fertilizer prices are a cost pressure on food, not an automatic price increase.