New Wave of Export Controls on Fertilizers and Staple Foods Raises Fresh Volatility Risks

Recent tightening of export licensing and quantitative controls on key fertilizers and agricultural products is reshaping short-term trade flows and reinforcing upside risks for input and food prices. Governments in several major producing regions are leaning more heavily on export authorizations, quotas and bans to protect domestic supply amid ongoing disruptions linked to the Gulf conflict and elevated food security concerns. For commodity traders and agribusinesses, this policy layer adds another source of volatility on top of already fragile logistics and energy markets.

Export-license regimes for staple grains such as wheat, corn and rice, as well as nitrogen and phosphate fertilizers, have been formalized or renewed in major trading economies, including China, where updated export licensing rules list cereals among goods requiring permits, and fertilizer exports remain tightly controlled through quotas and price-linked restrictions. citefturn0search5fturn0search17 At the same time, the fallout from the Strait of Hormuz crisis has tightened global fertilizer balances: WTO analysis estimates that up to 15% of global fertilizer trade has been affected by a combination of conflict-related disruptions and export restrictions. citefturn0search1fturn0search24 Together, these measures are amplifying price uncertainty for the 2026/27 crop cycle.

Introduction

Since early 2026, multiple governments have resorted to export bans, quotas and licensing requirements on agricultural and fertilizer products in response to geopolitical shocks, tight inventories and domestic food inflation. In China, authorities have kept strict controls on fertilizer shipments, including MAP, DAP and other phosphate products at least through August 2026, while maintaining close oversight of urea exports under quota-style arrangements. citefturn0search17fturn0search13 Parallel measures apply to a broad list of agricultural goods that require export licenses, including wheat, corn and rice. citefturn0search5

These policy moves are unfolding against a backdrop of disrupted Gulf shipping lanes and elevated fertilizer prices, with urea and DAP having risen sharply since the onset of the Strait of Hormuz crisis earlier this year. citefturn0search1fturn0search24 While some Gulf cargoes have resumed, trade data and market commentary still point to a constrained global balance. citefturn0search12 For import-dependent regions in Asia, Africa and Latin America, new or tighter export controls by large suppliers threaten to exacerbate procurement risks and increase landed-cost volatility for both fertilizers and staple foods.

Immediate Market Impact

Export bans and licensing constraints are effectively reducing freely available exportable surpluses, particularly in nitrogen and phosphate fertilizers. WTO estimates indicate that a combination of the Gulf conflict and export restrictions has affected up to 15% of global fertilizer trade volumes, curbing spot availability and reinforcing an upward bias in prices. citefturn0search1 Urea prices, for example, climbed by around 50% from pre-crisis levels by late March 2026, with DAP also registering substantial gains. citefturn0search24

In the short term, licensing and quota systems slow the release of cargoes, lengthen negotiation cycles and push more volume into discretionary channels rather than predictable term contracts. This has contributed to a widening of price spreads between origins and destinations, as visible in US Gulf NOLA benchmarks where urea now trades well above mid-2025 levels and DAP remains elevated. citefturn0search12 For grains and rice, tighter controls can shift demand abruptly toward alternative origins, lifting basis levels and futures volatility as buyers compete for limited unencumbered supplies.

Supply Chain Disruptions

Export licensing frameworks introduce administrative bottlenecks at ports and customs, with traders reporting longer lead times from contract to shipment where case-by-case approvals are required. China’s regime distinguishes between multi-shipment licenses and one-license-per-shipment categories for goods ranging from grains to other strategic products, concentrating decision-making at central and provincial commerce authorities. citefturn0search5 This structure can delay loadings and complicate just-in-time inventory management, especially during peak application seasons.

The interaction between policy restrictions and physical disruptions is particularly acute in fertilizers. WTO analysis highlights that the closure and partial reopening of the Strait of Hormuz, combined with export controls, have reduced effective seaborne availability and rerouted cargoes over longer distances. citefturn0search1fturn0search24 Importers in South and East Asia, which rely heavily on Middle Eastern urea, ammonia and sulfur, face higher freight costs, elongated transit times and more frequent shipment rescheduling. In some markets, this is leading to staggered or reduced fertilizer application, with potential implications for yields in the coming harvests. citefturn0academia15

Commodities Potentially Affected

• Urea and other nitrogen fertilizers – Export restrictions by major producers (China and parts of the Middle East) and transit disruptions through Hormuz have tightened supply, pushing spot prices significantly higher versus early 2026 levels. citefturn0search1fturn0search12fturn0search24
• Phosphate fertilizers (DAP/MAP/TSP) – Chinese policies limiting exports at least until August 2026 constrain global availability, especially for South Asian and African importers. citefturn0search17fturn0search13
• Potash – While less directly affected by current licensing moves, potash markets are influenced by substitution effects and overall fertilizer cost inflation, keeping prices firm. citefturn0search12fturn0academia15
• Wheat, corn and rice – Inclusion of cereals in export-license lists in some major producers and ongoing use of export bans in strategic markets (such as recent rice restrictions in parts of the Middle East) raise the risk of sudden supply withdrawals from global markets. citefturn0search5fturn0search16
• Sugar and vegetable oils – Although not always formally banned, these commodities are vulnerable to ad hoc export caps or licensing during price spikes, with precedent from prior food crises and current monitoring data on trade-restrictive measures. citefturn0search18

Regional Trade Implications

Asian importers of fertilizers and cereals are among the most exposed to the current wave of export controls. Data compiled on Middle Eastern exports show that a large share of urea, sulfur and ammonia has historically flowed to Asia, with disruptions forcing buyers to diversify toward alternative origins, including North Africa, Russia and, where available, Europe. citefturn0search20fturn0search13 This reorientation increases competition for limited surplus from non-restricted exporters.

Exporters with relatively liberal trade regimes and stable logistics stand to benefit from improved pricing power. North American and some Latin American fertilizer and grain suppliers are already seeing stronger demand interest as buyers seek to hedge against policy risk in other origins. citefturn0search12fturn0academia15 Conversely, net importers in sub-Saharan Africa, South Asia and parts of the Middle East may face higher import bills and more frequent procurement tenders, increasing their exposure to timing and basis risk.

Market Outlook

In the near term, export bans and licensing regimes are likely to remain a key driver of price volatility in both fertilizer and food markets. Traders should expect sporadic policy announcements to trigger sharp short-lived moves, particularly in urea, DAP and rice, where supply elasticity is limited and inventories are still rebuilding. citefturn0search1fturn0search24

Market participants will closely monitor any relaxation of export controls by China and other major suppliers, as well as further developments around Gulf shipping security. Hedging strategies that link fertilizer exposure with downstream grain and oilseed positions may become increasingly important, given the demonstrated pass-through from input shocks to crop yields and prices. citefturn0academia15 Improved transparency around licensing criteria and quota allocation could help dampen volatility, but current signals suggest that discretionary policy risk will remain elevated through at least the 2026/27 season.

CMB Market Insight

The current wave of export bans, quotas and licensing restrictions underlines how quickly policy can reprice risk in agricultural and fertilizer markets. For producers, importers and traders alike, the key challenge is no longer just physical supply, but the accessibility of that supply under changing regulatory conditions.

Strategically, diversified sourcing, flexible logistics and integrated risk management across inputs and crops are becoming essential rather than optional. Until major suppliers normalize their export frameworks and Gulf transit risks ease materially, agricultural commodity markets are likely to trade with a persistent risk premium embedded in both fertilizer and food prices.