Mosaic's Paradox: Why a Fertilizer Crisis Is Crushing a Fertilizer Stock

The Strait of Hormuz closure has taken ~35% of the world's seaborne urea and phosphate supply offline. Fertilizer prices are spiking. You'd think a major phosphate producer like Mosaic $MOS would be printing money. Instead, the stock is down ~20%.

The key nuance: the blockade lifts fertilizer prices, but it simultaneously blows up Mosaic's input costs.

Sulfur — the hidden bottleneck. Producing phosphate fertilizers (DAP/MAP) requires massive amounts of sulfuric acid. And 44% of the world's seaborne sulfur exports flow through the Strait of Hormuz. With the strait shut, sulfur prices have spiked even harder than fertilizer prices themselves.

Mosaic disclosed that every $10/ton increase in sulfur adds ~$10M to its quarterly costs. The total damage? An estimated $250M EBITDA headwind in Q1 2026 alone ~16% of the company's entire annual EBITDA, wiped out by a single input.

A classic margin squeeze. Revenue is going up, but costs are going up faster. And Mosaic can't simply pass through higher sulfur costs to farmers. U.S. phosphate demand is already down ~20% YoY because of affordability issues. Raise prices further and buyers just walk away.

As a result, Wall Street analysts have done the opposite of what you'd expect in a fertilizer shortage — they lowered Mosaic's 2026 EBITDA estimates.