Urea regains strength, Southeast Asian potash corrects, phosphate stable but margins under pressure

Overview

This report is Morgan Stanley's weekly monitoring of chemicals, fertilizers, agricultural products, and oilseed crushing margins. It primarily covers urea, potash, and phosphate prices and margins, fertilizer trade, agricultural product prices, U.S. agricultural production progress, global oilseed crushing margins, and valuation and individual-stock rating references for the agricultural chemicals sector. The overall view is neutral with divergence: nitrogen fertilizer prices are supported by geopolitical disruption, potash has corrected amid weak demand in Southeast Asia, phosphate prices are stable but remain pressured by costs, and oilseed crushing margins have improved in the United States while weakening in South America and some soft-seed spot markets.

Core views

First, urea prices have risen again, mainly due to uncertainty over Middle Eastern supply and tensions between the United States and Iran, providing near-term support for nitrogen fertilizer prices. Second, Southeast Asian potash has corrected because of soft demand and confirmation of low-priced transactions, while Brazilian and U.S. NoLa potash prices have been relatively stable. Third, phosphate prices appear stable, but raw material costs such as ammonia and sulfur remain high; Mosaic's temporary production cuts indicate that the supply side is responding to margin pressure. Fourth, oilseed crushing margins are uneven: U.S. margins have improved with support from higher soybean meal and soybean oil prices and Chinese purchases, while spot benchmarks in Argentina, Brazil, Canada, and EU rapeseed have declined. Fifth, the report continues to indicate that expectations for Corteva's crop chemicals R&D pipeline and growth ahead of its 4Q26 spin-off may be too low.

Analysis framework

The report uses a weekly price and spread tracking framework, comparing spot fertilizer prices, raw material prices, import volumes, trading activity, and crushing margin benchmarks across major regions. It also incorporates USDA WASDE, crop progress, farmer profitability, futures-implied crushing margins, and agricultural chemicals valuation tables for cross-sectional assessment.

Methodology notes

• Weekly industry monitoringPrice and spread summary

  Tracks week-over-week changes in urea, potash, phosphate, raw material, and crop prices.

  Prices in key regions including NoLa, Brazil, the Middle East, India, and Southeast Asia are used to assess the short-term impact of supply-demand, geopolitical, and trade developments on the fertilizer chain.

• Margin monitoringWeekly Oilseed Crush Margin Monitor

  Compares oilseed crushing margins in the United States, Argentina, Brazil, Canada, and the European Union.

  Spot and futures-implied crushing margins are calculated using changes in soybean meal, soybean oil, rapeseed meal, rapeseed oil, and raw material prices to assess the direction of profitability for agricultural processors such as ADM and Bunge.

• Supply-demand balanceUSDA WASDE and crop progress tracking

  Uses U.S. corn, soybean, and wheat balance sheets and crop growth progress to help assess agricultural product prices.

  The report cites July WASDE information showing U.S. corn and soybean ending inventories below consensus expectations, and analyzes agricultural markets in conjunction with weather, Chinese purchases, and disruptions to European exports.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Urea and nitrogen fertilizer producers

  Highly exposed to rising urea prices and uncertainty over Middle Eastern supply.

  Strengths

  Urea prices in NoLa, Brazil, and the Middle East all rose week over week, improving short-term price momentum.

  Weaknesses

  The price increase depends on geopolitical disruption, and its durability depends on whether Middle Eastern exports are impeded.

  Comparison

  Compared with potash and phosphate, nitrogen fertilizer had the strongest price momentum this week.

  Risks

  De-escalation, a resumption of exports, or weaker demand could cause prices to retreat.

• Potash

  Highly correlated with Southeast Asian demand and regional transaction prices.

  Strengths

  Prices in Brazil and U.S. NoLa remained stable this week.

  Weaknesses

  Southeast Asian gMOP prices fell $13/t, indicating soft demand.

  Comparison

  Potash's short-term price performance was weaker than urea's.

  Risks

  If low-priced transactions spread or demand remains weak, regional prices could face further pressure.

• Phosphate and Mosaic Company

  Affected by DAP/MAP prices, ammonia and sulfur costs, and production-cut arrangements.

  Strengths

  Indian DAP, Brazilian MAP, and Moroccan phosphate prices were generally stable.

  Weaknesses

  Sulfur prices remain significantly above pre-conflict levels, pressuring phosphate margins; Mosaic reportedly implemented additional temporary production cuts in North America and Brazil.

  Comparison

  Prices are more stable than potash, but margins are more affected by raw material cost pressure than urea.

  Risks

  Persistently high raw material costs, insufficient demand, or greater-than-expected production cuts could affect earnings.

• Oilseed crushing and ADM/Bunge

  Related to soybeans, soybean meal, soybean oil, rapeseed, and regional crushing margins.

  Strengths

  The U.S. nearby CBOT crush margin rose to $2.98/bu, and futures-implied margins for 2026 and 2027 also increased.

  Weaknesses

  Spot crushing margins in Argentina, Brazil, Canada, and EU rapeseed mostly declined.

  Comparison

  ADM's benchmark performance was relatively more positive, while Bunge's outlook was more complex due to weaker Latin American margins and model roll effects.

  Risks

  Higher raw material prices, continued weakness in Latin American margins, and divergence between paper margins and companies' actual cash margins.

• Corteva Inc. (CTVA.N)

  The report mentions its crop chemicals R&D pipeline and valuation expectations ahead of the 4Q26 spin-off.

  Strengths

  Morgan Stanley believes growth expectations and implied valuation for the business may be too low.

  Weaknesses

  This report does not provide full valuation details and only references a previous in-depth report.

  Comparison

  Compared with this week's fertilizer price tracking, CTVA is more focused on an individual-stock growth and spin-off theme.

  Risks

  There is uncertainty around R&D pipeline execution, spin-off implementation, and valuation re-rating.

Key data

• U.S. NoLa urea$363-410/st fob, +$23/st week over weekThe price increase was related to renewed escalation in tensions between the United States and Iran and additional transactions at the high end of the range.
• Brazilian urea$425-450/t cfr, +$8/t week over weekBrazil's June urea imports were 191kT, down 56% year over year.
• Middle Eastern urea$335-410/t fob, +$10/t week over weekApproximately 850mT left the Arabian Gulf after the peace agreement, but it remains unclear whether supply was disrupted following U.S. and Iranian military strikes.
• Southeast Asian gMOP$410-425/t cfr, -$13/t week over weekDemand was soft, and the price reflected a low-end Belarus-Thailand transaction.
• Brazilian MOP$390-405/t cfr, flat week over weekBrazil's June MOP imports were 1.5mT, down 6% year over year.
• U.S. NoLa MOP$335-340/st fob, stable week over weekInland prices declined, with the U.S. South falling $8/st to $375-385/st fob.
• U.S. NoLa DAP$765-770/st fob, down $10/stIndian DAP and Brazilian MAP prices remained unchanged.
• Tampa ammonia contract$665/t cfr, down $110/t from the prior contractThe decline was greater than the market's previous expectation of $50-75/t, but the price remained above the pre-conflict level of $625/t.
• Tampa sulfur contract$655/ltApproximately $159/lt above the pre-conflict level, continuing to pressure phosphate margins.
• U.S. nearby CBOT soybean crush margin$2.98/bu, versus $2.82/bu the prior weekThe change reflected soybean meal prices +3.8%, soybean oil prices +5.2%, and soybean input costs +4.2%.
• Argentine soybean crush margin$11/mt, versus $28/mt the prior weekA 4.0% increase in soybean prices weighed on margins.
• Brazilian soybean crush margin$19/mt, versus $28/mt the prior weekA 4.6% increase in soybean prices offset improvements in soybean meal and soybean oil prices.

Impact & implications

For investment implications, nitrogen fertilizer producers may benefit in the near term from higher urea prices and supply uncertainty, although the sustainability of the geopolitical disruption remains to be tested. The potash chain faces price pressure amid weak Southeast Asian demand. Phosphate companies face margin compression between stable prices and high raw material costs, with production cuts potentially serving as a supply-side balancing mechanism. Agricultural processors are clearly differentiated: improved U.S. crushing margins benefit relevant exposure, while weaker margins for South American and certain soft-seed spot markets may pressure near-term benchmark performance for companies such as Bunge.

Risks

• Changes in the Middle East and in U.S.-Iran relations could quickly alter expectations for urea and ammonia supply.
• Continued weakness in Southeast Asian potash demand could weigh on global potash prices.
• High raw material costs such as ammonia and sulfur could continue to compress phosphate margins.
• The scale of temporary production cuts by producers such as Mosaic has not been disclosed, creating uncertainty over the supply-side impact.
• Paper oilseed crushing margins may differ from companies' actual cash margins.
• Weather, revisions to WASDE inventories, Chinese purchases, and disruptions to European grain exports could all change the direction of agricultural product prices.

What to watch

• Developments in U.S.-Iran relations and whether Arabian Gulf urea exports are disrupted again.
• Whether low-priced Southeast Asian gMOP transactions spread to other regions.
• Whether Tampa ammonia and sulfur prices can fall back to pre-conflict levels.
• The duration and scale of Mosaic's temporary production cuts at relevant facilities including Florida, Brazil, Uncle Sam, and Faustina.
• Whether U.S. soybean sales to China continue, and how corn and soybean inventory expectations change following the July WASDE.
• Whether ADM's and Bunge's actual cash crushing margins follow the report's benchmarks.