Malaysia fertiliser producers halt new orders as Iran war drives up prices
A worker unloads harvested oil palm bunches from a truck at a oil palm buying centre in Pontian, Malaysia April 24, 2025. REUTERS/Hasnoor Hussain
KUALA LUMPUR/JAKARTA, March 18 : Fertiliser makers in Malaysia are suspending new orders as supply-chain disruptions and feedstock shortages stemming from the Middle East conflict drive up raw material prices, threatening to raise output costs for palm oil producers.
Fertilisers can account for more than half of production costs for palm oil planters. The near-closure of the Strait of Hormuz due to the Israeli-U.S. war on Iran has choked off a significant share of fertiliser produced in the Middle East, as well as oil and gas used in factories that produce it.
"Currently, raw material prices are increasing sharply, and suppliers are revising prices," Malaysian manufacturer Union Harvest said in a notice seen by Reuters.
"Because of this, we are temporarily holding new orders until the new price is confirmed," it said.
Indonesia and Malaysia are the world's dominant producers of palm oil.
FGV Fertiliser Sdn Bhd, a subsidiary of palm oil major FGV Holdings, said in a similar notice to distributors that it had suspended sales of all single-nutrient fertilisers such as urea, ammonium sulphate and muriate of potash with immediate effect, citing the impact of the global geopolitical situation on fertiliser supply.
Union Harvest and FGV Holdings did not immediately respond to requests for comment.
"Some raw materials have already increased by 100 per cent to 150 per cent within just two weeks," said Choon Chun Hong, general manager of Sabah Softwoods Hybrid Fertiliser, a supplier to estates in Malaysia and Indonesia.
Choon said his company, based in Malaysia's palm-oil-producing state of Sabah, is discouraging pre-orders to prevent price speculation.
"Fertiliser accounts for approximately 60 per cent of total production costs in Malaysia, and if the war is prolonged, the price of raw materials will continue to go up," said Roslin Azmy Hassan, CEO of the Malaysian Palm Oil Association.
Gulat Manurung, chairman of Indonesian smallholder farmers' group APKASINDO, said rising import costs are pushing up prices for chemical fertilisers at the farmer level.
"There's currently no other choice but to combine it with organic fertiliser," he said.
