Unraveling demand and supply shocks in the U.S. nitrogen market

Abstract Nitrogen fertilizer prices have been volatile, especially in recent years. This study decomposes nitrogen price changes into structural shocks related to supply and demand via a structural vector autoregression (SVAR) model and quantifies the relative contributions of these shocks to price movements over recent decades. Our findings reveal that corn and natural gas prices account for only a fraction of ammonia price fluctuations, while other factors in the nitrogen market have a more substantial influence.