Share prices for fertiliser companies have jumped in the wake of escalating hostilities in Israel, driven by concerns over supplies of key ingredients.

The immediate impact of the crisis for the sector is centered around the Port of Ashdod, a key shipping point for Israel's potash exports, which is now in a state of emergency, according to Bloomberg. That port facilitates around 3% of global supply.

Adding to the concerns are the risks to energy supplies. With key gas producer Iran potentially closely involved with the conflict, there may be further rises in costs for fertiliser makers.

Benchmark Dutch gas prices are 25% above Friday's close on Tuesday, at €46.60/MW. While the rise is concerning, the level is still very significantly below the peaks seen after Russia's invasion of Ukraine last year.

Threats

However, if the conflict widens and there are threats to key shipping routes in the region, then we could see a more severe disruption of supplies.

Right now, much of what is driving prices is mostly speculative - the state of emergency at Ashdod is the only actual bottleneck.

If the conflict is resolved quickly, then we will likely see fertiliser prices stabilise. However, any widening of hostilities would risk a rapid rise in prices for the commodity.