Sunday, May 31, 2026 · 03:01 PM
India received offers for phosphate fertilizer at more than $900 a ton in a tender on May 8, with prices ranging from $930 to $1,100 a ton. Indian Potash Ltd agreed to purchase 765,000 tons DAP for $930 per ton for delivery to west coast and another 581,500 tons at $935 per ton for delivery east coast—equivalent to about one-quarter of India's annual DAP imports. The $267.50 per ton gap between the February 27 spot reference and the May tender clearing price is not a rounding error. It's a margin killer.
The tender concluded at CFR prices of $930–935/MT for approximately 1.347 million tons, marking the highest DAP price level since July 2022 and nearly 40% above January levels. When the world's largest DAP buyer sets a new price floor, every farmer from Iowa to the Punjab recalculates their corn economics. Some 18 companies participated, offering a total of about 2.3 million tons—almost double the volume sought, which tells you everything about where sellers think prices are headed.
The closure of the Strait of Hormuz has resulted in a massive shortage of sulfur supply, with the strait serving as the transit route for approximately 50% of the world's sulfur prior to the conflict. Sulfur supplies have completely dried up, with the price skyrocketing from $150–$180 per ton a year ago to $850–$900 per ton today, with delivered prices in some regions even approaching $1,000 per ton. That's a 500% move in a feedstock that represents 30-40% of DAP production cost. Mosaic has reduced its phosphate output in both Brazil and the United States, as soaring sulfur costs have eroded its profitability. OCP Group has curtailed production by bringing forward scheduled maintenance, with current inventories sufficient to sustain production until the end of July or beyond.
Indian DAP production reached 303,000 tonnes in April 2026, DAP imports for January through April totalled only 298,000 tonnes representing just 39% of India's DAP import volume over the same period in 2025, and DAP stocks remained more than 1 million tonnes below the 2022 to 2024 seasonal average. Shipments must depart loading ports no later than August 15, with suppliers expected to primarily source DAP from Saudi Arabia, Russia, Egypt and Morocco.
Consensus thinks this is a Middle East story. It's not. It's a farmer profitability story dressed up in geopolitics. The 2008 fertilizer crisis saw DAP hit $1,200/ton and triggered riots in 30 countries. We're at $935 now, with kharif planting season starting in three weeks and Saudi fertilizer producers shifting to land transportation, with Saudi phosphate exports reportedly declining by nearly 50% year-on-year. India agreed last month to buy a record 2.5 million tons of urea in one single tender, at prices nearly twice as high as those paid just two months before.
Watch these three closely:
- Brazil's safrinha: Brazil corn production in 2026/27 is forecast to reach a new record at 139 million tons, but only if farmers can afford to fertilize. July Chicago corn at $4.57 versus $930 DAP means a lot of Brazilian acres get skipped.
- Sulfur-to-DAP spreads: When sulfur trades at $900 and finished DAP clears at $935, someone's crushing capacity is going dark. The phosphate market was already facing tight supply due to growing demand for sulfur from battery metal processing, with all major sources of phosphate supply simultaneously coming under pressure.
- Monsoon planting decisions: If sulphur sourcing delays extend beyond June 2026, domestic DAP production faces raw material shortfalls, and government intervention through emergency import authorisation frameworks could become necessary before the kharif season peaks. Rice, cotton, and pulses get planted with or without optimal fertilizer. Yields six months from now will show you who blinked.