The concurrent surge in fuel, food, and fertilizer prices underscores the broad vulnerability of agrifood system in an interconnected global economy, where supply chain disruptions can propagate rapidly. It also highlights the urgent need for a deeper understanding of the short-and long-term drivers of the price of the world’s most widely used nitrogen fertilizer: urea. To address this knowledge gap, our study employs a Vector Error Correction Model using global monthly data from 1985 to 2023. In the long run, the energy price index emerges as a key driver of urea price, underscoring the sector’s strong dependence on fossil fuels. In the short run, urea price exhibits a rapid and positive response to energy price shocks. Crop price demonstrates a positive and statistically significant long-term effect, though impulse response functions indicate no short-term significance, suggesting farmers gradually adjust urea usage. The real effective exchange rate exerts a negative impact on urea price, with U.S. dollar appreciation leading to lower global urea price-a relationship that remains statistically significant in the short run. Exogenous factors further influence pricing: temperature anomalies significantly increase urea price (+11.9% per 1°C rise), while the COVID-19 pandemic contributed to an 8.8% price surge and the Ukraine war pushed urea prices up by 9.75%, highlighting the vulnerability of fertilizer markets to global crises. Identifying the main drivers of urea price offers critical insights for forecasting price fluctuations and better guiding policy decisions.
