Sticky Pricing in Agriculture: Why Fertilizer Won’t Drop Soon
In the world of general economics, there’s a fascinating concept called “sticky pricing.” In a nutshell, this refers to the fact that many of the globe’s communities will rise at a moment’s notice but take two to three times as long to drop back down.
The average consumer is probably familiar with sticky pricing when it comes to one commonly used commodity: Gasoline. Typically, if news breaks at 8 a.m. that a new war has broken out in the Middle East or some natural disaster has shut down an oil refinery someplace, gasoline prices will jump 15 to 40 cents per gallon by noon that same day. However, if the crisis is resolved by 5 p.m., gasoline prices will not automatically revert to their 8 a.m. levels until several days (or weeks) have passed.
The reason for bringing up sticky pricing is because of the conversations I heard while I was attending the 2025 Agricultural Retailers Association (ARA) meeting this past December in Salt Lake City, UT. When it comes to sticky pricing, agriculture seems to have the concept in reverse, particularly when it comes to the crops themselves — especially major ones such as corn and soybeans.
For example, when USDA reports are published on poor crop conditions or weather events such as drought, crop prices tend to rise ever so slowly. When good data is shared, such as ideal weather conditions or strong harvest numbers, crop prices tend to drop very, very quickly.
For evidence of this, consider global crop prices since the end of the COVID pandemic. According to Dr. Joe Glauber, former USDA Chief Economist and current Research Fellow Emeritus with the International Food Policy Research Institute, crop prices were high on fears that the pandemic would negatively impact production. This caused them to rise slowly over the next two years or so.
However, once the pandemic started ending, crop prices dropped very fast to where they stand today. “The story in agriculture is that crop prices have really been depressed from the run-up they experienced in 2021-22,” said Glauber, speaking at the 2025 ARA meeting.
But Glauber did point out the one part of the agricultural economy that has experienced sticky pricing — fertilizer.
“Fertilizer prices came down rapidly in 2022 and early 2023 but have trended upward over the past 18 months,” he said. “[Phosphate] prices are particularly high, reflecting Chinese export restrictions on phosphate fertilizers.”
And unfortunately, the sticky pricing situation for fertilizer probably won’t correct itself in time for the 2026 spring fertilizer application season. The ongoing trade tariff battles between the U.S. and key fertilizer suppliers such as China and Canada, along with Russia’s continuing war with Ukraine (with Russia being another key fertilizer supplier to the world for potash and urea ammonium nitrate), mean the sticky pricing for crop nutrients are probably here to stay for a bit longer.
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