Alexis, to start things off, how should we think about the ways that the war in Iran and the closure of the Strait of Hormuz are having an impact on agricultural production?

Sure.

It's a great question, um, with a longer term horizon answer.

So I'm gonna walk you through first the supply side impacts and then how the material moves through the chain and what that means for the food consumer.

So with the closure of the strait for the fertilizer market, the world lost access to exportable fertilizer, mainly nitrogen, phosphate, and sulfur.

And farmers around the world use what we call NPKs, your nitrogen, phosphate, and potash materials, and they use a different flavor depending on what crop they're producing.

But with the strait's closure, we lost about forty percent of globally exported urea, about twenty percent of the world's ammonia, which is a precursor to urea, and then about twenty percent of global phosphate, as well as fifty percent of sulfur, which is an input to phosphate.

... crop yields are gonna go down 5% or, like, 70%?

Before we get to the effects of what six hundred a ton urea, what the impact of that is, what was the impact on the, uh, 2022 price spike? What were the domino effects of that massive surge?

Yeah.

So the 2022 price surge was really two supply side shocks.

In 2021, China started their export ban on urea and phosphate fertilizers.

And the importance of China to the fertilizer market, they really-- it cannot be overstated.

So China is the marginal producer for urea and phosphate.

So generally speaking, when China is exporting fertilizers, prices globally will tend to fall.

So people use less fertilizer, you get lower yields, supply goes down, I assume prices go up, or you have farmers that continue to use fertilizer, but it costs them a lot more, and so they have to offset it with higher prices and prices still go up.