Fertilizer shortages that crippled the agriculture sector and raised food costs globally may be on the verge of extinction.
Ropes around the world are dependent on nutrients from Russia, one of the biggest exporters, and four months ago the invasion of Ukraine rocked markets for the critical chemical. Ultimately the prices went up so much that the farmers stopped buying and now the market has turned. Fertilizer is being supplied from Florida to South America. According to people familiar with the matter, ships are waiting to be landed and companies are struggling to reduce stock at ports and warehouses.
In Brazil, warehouses are approaching maximum capacity as farmers are betting prices will drop further. According to Bloomberg’s Green Markets and The Fertilizer Institute, by the time Russia attacked North American potash reserves, just weeks after March, prices soared and farmers abandoned applications.
Meanwhile, fears of a complete shutdown of fertilizers from Russia have not been allayed. According to cargo data tracked by Bloomberg, Russian fertilizer sales have been exempted from sanctions imposed by the US and the European Union in response to the war on Ukraine, and some shipments are entering the US. A ship arrived from Russia with 12,000 metric tons of granulated urea, a common nitrogen fertilizer, on 8 June with a bill of lading. Although this amount is relatively small, it confirms that the product has found a way to US shores.
The US government is encouraging agricultural and shipping companies to buy and transport more Russian fertilizer.
Bulk fertilizer prices have been falling after hitting several-year highs. North American prices are at their lowest since January and the closely watched index for the continent is down 35% since touching records in late March, according to Green Markets. Farmers are still waiting for lower prices as the trend of cereals is higher, delaying the extension of the arbitrage of nutrient purchases.
Green Market’s North American Weekly Fertilizer Price Index dropped 4% this week, compared with a 3% drop from the previous week. Wholesale New Orleans urea fell to its lowest level since August, while New Orleans ammonia rose 2% amid rising foreign demand.
The fall in fertilizer prices – if it continues – could ease some concerns that farmers will abandon synthetic nutrient applications to save money, reduce crop yields and cause food inflation and hunger in some parts of the world. will spoil it. Still, it is too early to tell whether prices will rise again if the war in Ukraine continues into a period when demand is seasonally high.
“Fertilizer prices softened during the spring season as delayed sowing, ample supply and record per tonne prices prompted farmers to pull back on fertilizer applications,” said Alexis Maxwell, an analyst at Green Markets. The fertilizer-to-crop price ratio, a key affordability metric, has sunk, “reflecting a potential buying opportunity for maize farmers who need the product today.”