(Bloomberg) -- Hurricane Ida struck the heart of the U.S. fertilizer industry, and now Storm Nicholas threatens even more damage in the Gulf of Mexico, potentially driving up the cost to produce food.
The storm, classified as a tropical depression, is lashing the U.S. Gulf Coast with torrential rain that could last for days, knocking out power and unleashing floods just two weeks after Hurricane Ida. The region is the U.S.'s main trading hub for fertilizers, and home to the world's biggest nitrogen complex.
Prices for major fertilizers soared after Ida blew through New Orleans, shutting down plants and causing logistics nightmares for companies trying to ship products. A farm chemical known as diammonium phosphate, or DAP, climbed to the highest since 2008 in the area. Prices for urea, which is nitrogen-based, also spiked.
Expensive fertilizer adds to the cost of producing food at a time when farmers already see margins stretched thin, with everything from equipment and labor to seeds getting pricier. The hikes for the chemicals, which farmers use to ensure abundant crops, could exacerbate global food inflation.
“Even if Nicholas doesn't have much impact on fertilizer production, more rain will not be good for logistics in the New Orleans area,” Steve Seay, an analyst with Bloomberg Intelligence, said in an email. “Getting empty barges in place to load fertilizer has been a problem.”
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