A fertilizer expert is concerned that already volatile fertilizer and energy markets could get worse because of war and trade policy.
Josh Linville with Stone X explains that so far the war in Israel hasn’t impacted its ability to continue as the world’s fourth-largest potash supplier. “Fortunately, from that side of it, operations do not sound like they were impacted. It doesn’t sound like manufacturing, mining, all of that situation has stopped. It doesn’t sound like shipping channels have stopped, so, so-far, the effect on the potash market has been nil.”
Linville says the energy markets have placed war premiums into market values, causing world natural gas prices to jump, increasing the cost of producing nitrogen.
He also commented that U.S. fertilizer inventories are already low, and the U.S. Commerce Department’s planned increase in tariffs on Russian phosphates from 9.19% to 53.29% would hurt farmers and consumers. “We are seeing a lot more groundswell, a lot more challenges over these duties from people saying we were told that North American manufacturing of phosphate could keep up with North American demand, yet I can’t get MAP (m=monoammonium phosphate) and that the reason it’s a hundred dollar a ton premium over DAP (Di-ammonium phosphate).”
Linville says he’s also concerned about the safety of shipping through the Persian Gulf if world leaders issue sanctions against Iran for any involvement in the attack on Israel.
If Iran, a major nitrogen exporter in the region, becomes involved in the conflict, it could lead to supply constraints and potential price spikes for nitrogen-based fertilizers. These price spikes could be exacerbated by increased premiums in benchmark Dutch TTF natural gas, a key component in nitrogen-based fertilizer production.
EDITOR’S TAKE:
As if we didn’t have enough uncertainty in the fertilizer markets already, throw in a few more geopolitical variables and things could become very unsettled, very quickly. It is easy to conjecture what might occur under various scenarios, but one thing is certain – the conflicts in the Middle East and Ukraine will keep us on the edge of our seat for as long as they continue. Any expansion involving other nations only serves to make things more volatile, especially as the 2024 spring planting season gets closer. We will need to plan for the worst, but hope for the best. Keep in mind – one of our premier AgPack® partners is AgroLiquid fertilizer. They could be a very big drawing card with things heating up in the global fertilizer market.
