Expect Fertilizer Prices to Increase

[raybark]

I've been putting some of my former procurement manager skills to work.


Wholesale fertilizer prices had a moderate jump (12-14%) at the end of last year. Those increases were primarily the result of three factors:

• Increased energy costs (especially natural gas pricing) for the manufacture of nitrogen and nitrogen fertilizers.
• Shipping costs - it used to cost $2000 to $2500 to ship a container from Europe to North America, now it is $10,000 to $15,000, or even more.
• China stopped exporting all Ag fertilizer salts last fall (as an example, China exports 40% of the urea worldwide), just at the time when Northern Hemisphere farmers start acquiring fertilizer salts for the spring planting.

In January, most producers felt that there would be upwards pressure on fertilizer salt pricing until the end of the first quarter, and then prices would stabilize because of reduced demand.


However, notice that there has been no mention about the war and subsequent boycott in this, so far. That throws three more factors into the equation:

• If the war continues to cause energy prices to go up, then fertilizer prices will continue to go up with them.
• Russia and the Ukraine are large exporters of nitrogen fertilizer (urea, ammonium nitrate, etc.). The loss of those exports will cause all nitrogen fertilizers to increase in price.
• Finally, Russia and Belarus are the #2 and #3 exporter of potassium chloride, which is needed for potassium nitrate and monopotassium phosphate (MKP) production. Hopefully, there will not be a shortage of KNO3 and MKP at this time, as both Israel (Haifa) and Chile (SQM) are also exporters of KCl), but we can expect the price will still go up.

[Sheryl]

Thank you Ray!