Natural Gas Price Shocks and the U.S. Fertilizer Market: Are All Price Shocks Alike?

Wonseok Lee, Jaebeom Kim and B Brorsen

No 404832, 3rd ASEAN University Symposium for Sustainable Food Systems, Faculty of Agriculture, Chiang Mai University, Thailand, May 21-22, 2026 from Association of Southeast Asian Nations (ASEAN)

Abstract: This paper examines how shocks in the natural gas and corn markets influence nitrogen fertilizer prices and how these relationships change after the 2005 and 2007 changes in biofuel policies. Using a block-recursive structural VAR framework, we decompose changes in fertilizer prices into structural shocks driven by supply, demand, and precautionary demand. The results show that fertilizer prices are influenced mainly by demand-side shocks, while supply shocks have only small effects on prices. After the structural break, corn demand shocks become more influential, indicating tighter linkages between corn and fertilizer markets. These findings imply that biofuel policies increased nitrogen fertilizer price volatility by strengthening the linkages between energy and agriculture, with fertilizer price movements driven primarily by demand-side shock

Keywords: Demand and Price Analysis; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 32
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ags:asea26:404832

DOI: 10.22004/ag.econ.404832

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