(Bloomberg) -- Hurricane Ida struck the heart of the U.S. fertilizer industry, and now a second storm threatens even more damage in the Gulf of Mexico, potentially driving up the cost to produce food.
Prices for major fertilizers soared after Ida blew through New Orleans, the main hub for U.S. trading, shutting down plants and causing logistics nightmares for companies trying to ship products. Prices for a fertilizer 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.
Tropical Storm Nicholas is forecast to cause even more headaches for the region.
“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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