Urea hit the equivalent of $2,800 a tonne in today’s dollars back in 1974.

That’s not a typo—and it’s not ancient history either.

To understand how that happens, you need to start with geography. Roughly a third of global fertiliser trade by sea—not production, trade—passes through the Strait of Hormuz. That alone should make anyone with even a passing interest in running a farm sit up and worry—not just about whether it’s going to rain, but whether the Strait is open.

But it gets worse.

Nearly half of global urea exports, around a third of ammonia exports, and close to half of global sulphur trade is directly or indirectly exposed to the same region. It’s worse than OPEC’s grip on oil. The Strait of Hormuz looks less like a shipping lane and more like a beer bottle in a shooting gallery.

And it’s not just an energy bottleneck. It’s a nutrient bottleneck—a chokepoint for the very inputs that underpin modern food production. It controls not just diesel, but the nitrogen for urea and the sulphur used to turn rock phosphate into super.

Global urea production has grown from roughly 25 million tonnes in the 1970s, when the world produced around 1 billion tonnes of grain, to about 100 million tonnes by 2000, supporting roughly 2 billion tonnes of grain. Today, it sits near 200 million tonnes, underpinning close to 3 billion tonnes of output.

Modern grain production doesn’t run on rainfall alone—it runs on nitrogen.

Urea is made from natural gas, tying it directly to the volatility of global energy markets. When the world shifts away from coal towards gas, prices rise. When one of the world’s major gas or urea exporters picks a fight with its neighbours, prices rise.

In the world of urea trading, there is very little spare capacity. There are no meaningful global stockpiles. There is no strategic reserve.

So when something goes wrong, prices don’t drift—they jump.

The market is also limited by the fact that it is dominated by just a handful of countries, many of which are large agricultural users themselves.

• China produces roughly 60 million tonnes and consumes nearly all of it domestically. When supply tightens, exports vanish.
• India produces about 30 million tonnes but consumes closer to 40, making it a permanent importer regardless of price.
• Russia and the United States sit on around 10 million tonnes each. Russia exports heavily—if it can—while the US consumes most of its production and still imports around 5 million tonnes.
• Iran, Indonesia, Egypt and Pakistan produce in the 6–7 million tonne range, but much of that is absorbed locally or locked into contracts.
• Qatar and Saudi Arabia, with limited domestic agriculture, are among the few true export-focused producers.

The result: global production looks large on paper, but the freely traded pool is small and concentrated. Countries like Australia are competing for a thin slice of supply.

It is, in effect, a just-in-time system for the most critical input in agriculture—with a long history of blowing up.

History tells the story.

The first oil shock in the 1970s saw urea move from around US$60/t to close to US$300/t by early 1974—a fivefold increase. In today’s terms, that’s roughly A$2,800/t. Luckily, back then farmers had sheep and clover to carry them through.

It jumped again in the early 1980s following the outbreak of the Iran–Iraq war. Prices rose from roughly US$150–250/t to US$550–600/t, or about A$1,200/t in today’s terms, before beginning a long, slow decline over the following two years. The 80s were tough years when it came to farming.

The global commodity boom of 2007–08 saw urea prices rise from around US$250–300/t to peaks above US$550–600/t, effectively doubling—and then doubling again from the lows of the early 2000s—before easing. In today’s terms, that equates to roughly A$1,000–1,200/t on farm.

Between 2015 and 2020, urea traded steadily around US$250/t. Then came the 2022 shock, triggered by the Russia–Ukraine war, with prices hitting around US$1,000/t (A$1,800/t today)—a fourfold increase—before easing again to a higher mean.

Now we are in 2026, in the middle of another Middle East conflict.

Prices have moved faster than in any of those cycles, climbing from around US$350/t in December 2025 to US$400 in January, US$500 in February and US$600 in March, with forward indications now sitting around US$750/t. By the time that lands in Australia, we are looking at roughly A$1,400/t on farm—and that’s for a contract signed today for mid-May delivery.

Not that you are likely to get it. There is effectively no new stock available for April seeding.

So could prices keep rising—to A$2,000/t or even $2,800 like in the 1970s?

When you consider that today’s $1,400/t is still only about half of what farmers were paying in real terms at the 1974 peak, the answer is simple: don’t rule it out.

You would be brave to call the current price the top of the market while the war is still on—and braver again to assume product will be available if you wait for it to come down.

When the market tightens, it’s like booking lambs into the meatworks: it’s not when you’ll get a slot, it’s whether you get a call back at all. There is only so much capacity—and when it’s full, the phones just ring out.

And we are not alone in the queue.

We are competing against Indian government buyers, Turkish traders, Bangladeshi spot buyers and Brazilian importers—hard players in a hard market. This is not a polite, rules-based system. It is transactional and unforgiving.

Which means it’s not a game for the polished corporate western commodities buyer who expects the market to act like gentlemen.

Not surprisingly, our traders are running into brick walls trying to do deals in the hard-edged world of fertiliser trading (where is Trevor Flugge when you need him?).

Every day or so a shipload comes up for bid, but it’s more like the sale yards than a spreadsheet. The real deals are being done off to the side, like at the saleyards between the buyers, deciding who bids on what and at what price. Maybe we need to draft in some old school stockies to teach the desk jockey fert traders how the real world works?

On any given day there are 50 buyers chasing the same 50,000 tonnes—trying to feed farmers in India, Brazil, Australia, Turkey, France, Argentina and everywhere in between.

The price you see online is not the real price—certainly not if you want to load a ship this weekend. It’s not like trading grain on Chicago. It’s deals within deals for the quick and the brave.

If our buyers have not been able to lock in spot loads even while paying above the quoted world price, it tells us they are out of their depth.

Worse, every day they miss out, the price is only heading only one way—as the northern hemisphere chases nitrogen for spring and the southern hemisphere chases it for winter.

The takeaway is that the big importers appear to have been caught playing the market as agents rather than acting like genuine suppliers—failing to lock in orders early enough and get them on the water before committing to farmers. Their credibility has been badly burned, and farmers are quite right to be angry.

The next question is obvious: what does this mean for grain? Will the global urea shock flow through into higher wheat prices and save this year from being a disaster?

To answer that, it is worth going back through the previous urea price spikes and tracking what happened to wheat.

1973–74: Urea increased fivefold and wheat lifted from roughly US$60/t (~$1.60/bu) to US$100–120/t (~$2.70–3.30/bu) in 1972–73 as fertiliser and fuel costs began to bite. Then came the second jump. Wheat pushed on to US$180–220/t (~$4.90–6.00/bu) through 1974 up 3–4x, compensating farmers for the spike in input prices.

Translate that into today’s terms and it becomes interesting. A similar move would imply urea rising from last year’s $650/t to around $3000/t on farm, while wheat rises from A$330/t to somewhere in the order of A$900–1,300/t. Nice if we could get it.

1981–82: Wheat did not follow the second oil shock. While urea tripled, Chicago wheat sat flat in a range of US$130–180/t (~$3.50–4.90/bu) and did not move. In real terms, it was falling. Supply had caught up, stocks were comfortable, and the earlier price signal had worked. Ugly days few old timers will forget.

2007–08: Urea doubled and wheat went from US$3/bu (~US$110/t) in 2006 to over US$10–11/bu (~US$370–400/t) by early 2008—a 3–4× move in under two years. Happy days—if you bought and sold at the right time.

2022: Urea rose roughly fourfold, while wheat moved from US$7–8/bu to US$11–12/bu—not quite doubling. In Australia, prices were more muted, largely A$400–450/t, with only brief spikes higher. Nothing like what was needed to compensate for the price of urea—but still good pricing, if you were lucky enough to catch the wheat spike.

So what is the US Israel Iran war going to be—a rerun of the OPEC oil shock, the Iranian shock, the commodity boom, or the Ukraine war?

Right now, it doesn’t look like any of them—at least not yet.

Chicago wheat is sitting around US$6/bu (~A$330/t), which tells you the market isn’t pricing in a supply crisis… yet. Stocks are still relatively comfortable, and there has not yet been a major disruption to global grain flows.

So the real question is whether wheat eventually follows urea up—as it did in 1974, 2008 and 2022—or whether this remains a one-sided squeeze on growers, like the early 1980s.

At this point, it looks more like the 1980s: a painful spike at exactly the wrong time in the growing season, with input costs surging while grain prices lag behind.

But it won’t take much. At these input levels—and with nitrogen simply not available in some cases—a modest northern hemisphere shortfall could push wheat sharply higher.

With the world now so dependent on nitrogen to drive yields, my view is that wheat moves at some point. That said, with that same dependency, urea is unlikely to ease any time even if the war ends tomorrow as the backlog in global supply chains is too long.

But then what would I know—I read history, and two weeks ago I thought this war would be over by seeding.