Abstract
Recent fertilizer price booms have raised concerns about whether prices reflect market fundamentals. This study examines urea fertilizer price explosiveness (‘bubbles’) in China, a major global producer and exporter, from 2016 to 2023. We identified six episodes of explosiveness, with five occurring during the 2021–2022 boom. Regression analysis reveals that rising coal and corn prices significantly increase the likelihood of price bubbles, while China’s export restrictions significantly reduce it. Additionally, bubble likelihood ratios were lower during the Black Sea Initiative but increased following the implementation of agricultural subsidies. However, the magnitudes of these changes were not economically meaningful.