Fertilizer Prices Just Reset the Math on Your Next Cost Conversation With Walmart

Danone CEO Antoine de Saint-Affrique told CNBC this morning that his company is “not there yet” on price hikes, but acknowledged that a sustained conflict will have an impact. Hours earlier, the U.S. struck Iran’s Kharg Island oil terminal. Iran rejected a temporary ceasefire proposal and its deadline to reopen the Strait of Hormuz expires tonight. That hedged language reflects where most large food suppliers are sitting right now: watching and hoping. But the supply chain math is moving faster than the diplomatic calendar, and for Walmart suppliers, the timing compounds in ways that a generalized inflation forecast does not capture.

The Hormuz Disruption Is an Agricultural Input Crisis, Not Just an Energy Story

The national average for a gallon of regular gasoline hit $4.14 today, according to AAA, up from $2.98 the day before the war began on February 26. That consumer-facing number is the visible edge of a cost wave that runs much deeper into the food supply chain. Urea prices increased by 50% since the start of the war, as of late March, according to tracking of the Strait of Hormuz crisis. Nitrogen fertilizer is the foundational input cost for corn, wheat, and most commodity crops, and corn is the primary feedstock for U.S. beef, poultry, and dairy. Natural gas, which determines 70% to 90% of the cost of producing nitrogen fertilizer, has seen a 20% production drop due to the war, with prices rising as much as 70%, according to analysis by Florida International University economist Aya Chacar published this week in The Conversation.

The timing makes this worse than the numbers alone suggest. American farmers are the world’s largest importers of urea, and planting season is underway now, precisely when farmers need fertilizer most, as The American Prospect reported last week. Even if the Strait opens soon, restarting production and transport for fertilizers and their components could take weeks, weeks that Northern Hemisphere farmers do not have, according to analysis published this week by the Carnegie Endowment for International Peace. The implication for suppliers of beef, poultry, dairy, packaged grain products, and cooking oils is that agri-input costs are not a Q3 forecast problem. They are a planting-season problem whose harvest effects land on shelves in the second half of the year.

The U.N. Food and Agriculture Organization has predicted no more than a three-month window for action before risks escalate significantly, affecting global planting decisions for 2026 and beyond, according to Foreign Policy. Fitch Ratings raised its 2026 ammonia and urea price expectations by roughly 25%, per reporting by the Anadolu Agency. Britain’s Food and Drink Federation revised its food inflation forecast from 3.2% to at least 9% by year-end, and that revision, published April 1, was built on an assumption that the Strait reopens within two to three weeks. The USDA’s March food price forecast projecting 3.1% average inflation for 2026 was assembled before the war began, as Chacar noted. It is already stale.

Walmart Has Been Moving in the Opposite Direction

Before the war started, Walmart had spent more than a year pushing the supplier relationship toward lower prices, not higher ones. A Walmart spokesperson told NPR in January that the chain had added more rollbacks than at any point in the prior two years. General Mills cut prices on nearly two-thirds of its North American grocery products in Q4 2025 and saw volume recover. PepsiCo announced similar reductions. The message from Bentonville across that stretch was consistent: the volume-versus-price negotiation has been settled, and the answer is volume.

That context is the background every supplier team walks into if they need to open a cost conversation now. As recently as August 2024, Walmart’s CEO said the company was pushing back against suppliers still raising prices, and said publicly that “prices need to come down,” per Meat+Poultry’s coverage of the Q2 earnings call. Private label gained share through that same period. In the quarter ended April 2025, Walmart reported that private brand penetration in grocery grew more than 90 basis points, according to the company’s earnings presentation filed with the SEC. When name-brand suppliers hold price while store brands hold shelf, the share loss is not easily recovered in the next line review.

The difficulty now is that the cost shock running through fertilizer, energy, and shipping is harder to negotiate than tariff-era pressure was. Tariff inflation moved supplier by supplier and origin by origin, giving both sides time to model exposure and find room. Fertilizer and energy shocks hit the entire commodity supply chain at once and fall hardest on the categories where Walmart’s private label is deepest: meat, dairy, grain-based packaged foods, cooking oils. A buyer who has spent two years watching private label gain share in those categories has less reason to accommodate a cost-increase request than at any point in recent memory.

A Quick Resolution Does Not Reset the Agricultural Calendar

Some analysts have pointed to plentiful existing food stocks as a near-term buffer on commodity prices. Bloomberg noted this week that grain inventories entering the crisis are acting as a check on immediate price spikes. That cushion is real, but it operates on current supply, not next harvest. Fertilizer that does not reach farmers this month does not get applied this month. The price shock and shortage during the spring planting season could reduce U.S. corn planting and yields, the main feedstock for beef, poultry, and dairy, and potentially push global food prices higher into 2027, according to agricultural economists tracking the conflict. A short conflict produces a short energy price cycle. It does not produce a short agricultural one.

ING economist Thijs Geijer told CNBC that higher costs will filter through supply chains as price increases for commodities, agri-inputs, energy, packaging, and transportation, and that the anticipated slowdown in food inflation will not happen this year. For suppliers in fertilizer-intensive categories, that judgment means the cost conversation is a matter of when and how it is framed, not whether it happens.

The Framing Matters as Much as the Number

Suppliers who attempt to open cost conversations in this environment will face a buyer team whose category data reflects two years of private label share gains and whose rollback count is at a multi-year high. The pattern from Walmart’s own earnings commentary is that cost-increase requests in this posture tend to accelerate private label placement in the relevant category, deepen rollback support on compliant competing brands, and in some cases prompt alternative sourcing conversations.

The suppliers best positioned through the next line review are not those who wait for the cost wave to arrive fully before raising it with buyers. Fertilizer futures, corn price projections, and energy cost indexes are public. Buyer teams have access to the same sources. A supplier who brings the commodity data now, before the shelf reset conversation and not during it, and proposes a phased or category-specific adjustment tied to traceable input benchmarks is more likely to be heard than one who arrives with a blanket request after costs have already shown up in their P&L.

For 3P Marketplace sellers, the dynamic is more immediate and less negotiable. There is no buyer conversation to have. As commodity-intensive category costs rise, the decision is concrete: hold price and compress margin, or raise price and accept the risk that the Buy Box shifts to a seller with lower landed cost or deeper inventory purchased before the shock. For sellers in beef, poultry, cooking oils, and grain-based packaged goods, the inventory position held today is the cost position they compete from while the planting-season lag plays out.

The corn belt plants in late April.

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