Key Points:
Hormuz-to-Kitchen Chain: Strait closure chokes sulfur supply → U.S. phosphate plants shut down → fertilizer costs spike → grocery prices rise.
45% of Seaborne Sulfur: Nearly half the world's ocean-shipped sulfur passes through the Strait of Hormuz, and the closure has driven prices from $280 per tonne to over $1,000 globally.
If Hormuz Stays Closed: USDA corn acreage projections for 2027 could fall further from the current 96.7 million acres, as the USDA forecasts fertilizer costs at $179 per acre and shift away from nitrogen-hungry crops.
MMosaic's Collapse Confirms the Squeeze: MOS shares dropped 45% from a 52-week high of $32.25 to $17.68 as the company posted a $273 million Q2 net loss and withdrew its full-year phosphate production guidance entirely.
Earlier this month a fertilizer plant in central Florida sent layoff notices to 199 workers. The plant makes phosphate. It is the raw material that helps corn grow. It helps wheat grow. It helps the grass on your lawn grow. The plant is not broken. The machines are fine. Mosaic shut it down because it can't get sulfur.
I can't stop thinking about this.
Sulfur is the ingredient you need to turn phosphate rock into the fertilizer that feeds crops. And 45 percent of the world's seaborne sulfur moves through one narrow strait. The Strait of Hormuz. The same waterway Iran has been mining and shooting at for eight months.
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When that sulfur stopped flowing, the price went through the roof. Before the war it cost about $280 a tonne. Mosaic just locked in contracts for the third quarter at $705 a long ton. On the open market it has topped $1,000. That is not a typo. The stuff that makes your food grow costs three and a half times what it did a year ago.
Here's what worries me. Mosaic is not some small outfit. It is the biggest phosphate producer in the country. Its plant in Faustina, Louisiana, has been partially shut down since May. Its Bartow plant in Florida is running at 40 percent. And now South Fort Meade is closing in December. The company lost $273 million last quarter. It pulled its full-year phosphate production forecast. It cannot tell investors how much fertilizer it will make this year.
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I don't think most people realize how short the chain is from that strait to your kitchen table. Sulfur makes phosphate fertilizer. Phosphate fertilizer grows corn. Corn feeds cattle. Cattle become the ground beef in your fridge. Corn also becomes the feed for chickens and hogs. It becomes the syrup in your cereal. It becomes the ethanol in your gas tank. When fertilizer gets expensive, everything downstream gets expensive. Not next year. Now.
Farmers already made their call. The USDA says corn acres dropped about 2.1 million this year. Down to 96.7 million. Growers looked at $179 an acre in fertilizer costs and said no thanks. They planted soybeans instead. Soybeans need less nitrogen. Less phosphate. Less of the stuff that costs three times what it used to. But less corn means less feed. Less feed means higher meat prices. The math is simple and it is ugly.
Wheat is up more than 30 percent this year. Anhydrous ammonia in Illinois hit $908 a ton last month. That is $119 more than a year ago and $239 more than two years ago. The USDA keeps raising its grocery forecast. Right now it says food you eat at home will cost around 2.4 percent more this year. I get it. Two and a half percent does not sound like a lot. But that is on top of eight straight years of increases. Your grocery bill has gone up by roughly a third since 2020.
The average household now spends $519 a month at the store. A family of four spends $725. Every dollar of that carries a hidden tax from a waterway most Americans could not find on a map.
Nobody talks about sulfur. The cable shows talk about oil. They talk about gas prices. They talk about Iran's drones hitting tankers. But the fertilizer chain is the slower fuse. Oil prices spike and you feel it at the pump within days. Fertilizer prices spike and you feel it at the store four to six months later. That delay is what makes it invisible. And that is what makes it dangerous.
Mosaic's stock tells you the market already knows. It trades at $17.68. Its 52-week high was $32.25. That is a 45 percent drop. Nobody is rushing to buy the company that makes the stuff that grows your food. That should tell you something.
Here is the number I keep coming back to. Forty-five percent. That is how much of the world's seaborne sulfur moves through one chokepoint controlled by a country we are at war with. We built our food system on the assumption that strait would always be open. It is not open. And nobody in Washington is talking about it.
I want to be wrong about this. I want sulfur to start flowing again. I want Mosaic to rehire those 199 workers in Florida. But the war has no end date. The Hormuz ceasefire proposals are still on the table. And every month those plants sit idle is another month the fertilizer pipeline gets thinner.
Your grocery bill is a war bill now. You just can't see the line item.
More on this tomorrow.
— American Ledger
