Fertilizer prices expected to remain higher for longer
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This blog is the third in a series of 11 blogs on commodity market developments, elaborating on themes discussed in the April 2022 edition of the World Bank’s Commodity Markets Outlook.
Soaring prices are driven by a confluence of factors, including surging input costs, supply disruptions caused by sanctions (Belarus and Russia), and export restrictions (China). Urea prices have surpassed their 2008 peaks, while phosphates and potash prices are inching closer to 2008 levels. Concerns around fertilizer affordability and availability have been amplified by the war in Ukraine.
Record-high input costs. Similarly, soaring prices of coal in China, the main feedstock for ammonia production there, forced fertilizer factories to cut production, which contributed to the increase in urea prices. Higher prices of ammonia and sulfur have also driven up phosphate fertilizer prices.
Sanctions and export restrictions. , while Russia and Belarus together make up two-fifths of global MOP exports. Adding to supply concerns, China has suspended exports of fertilizers until at least June 2022 to ensure domestic availability.
Supply disruptions. Although urea and DAP prices have retracted in recent weeks due to lower tender offers in India as buyers await clarity on Indian fertilizer subsidies, potash prices show no signs of easing. Moreover, Lithuania has halted the use of its railways’ network to transport Belarusian potash to the port of Klaipeda, which typically handles 90% of Belarusian fertilizer exports.
Robust demand. Global fertilizer consumption has remained strong throughout the COVID-19 pandemic. Brazil and the United States have allocated record acreage to soybean (a fertilizer-intensive crop). Demand is also strong in China due to increased feed use, especially maize and soybean meal, as the country is rebuilding its hog herd population following the African swine fever outbreak.
Outlook and risks. Apart from input costs, risks to the outlook depend on whether China’s urea and DAP exports will resume after June. For potash, prices are anticipated to remain historically high through the next year unless supply returns to international markets from Russia and Belarus.
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Farmers are already reducing fertilizer cost over 70% while increasing yield nearly 7% with “SNX30-XL nutrient supplement”. As one farmer describes it, “It almost feels like cheating!”
Those who has abundant raw materials such phosphate rock, Natural gas, oil, etc in their country need to help the poor nations in this need of crisis. They have such recover from COVID crisis and now facing this one.
Other thing is to note that we are again pushing against climate change agenda that is to stop use of carbon chain however by looking in the current scenario, it appears that this is secondary and we are again promoting the carbon based fossil fuels.
Hope the message is loud and clear.
regards
Using a soil food web approach to growing can reduce the need for expensive chemical inputs while increasing yields and making food less susceptible to disease. Look for Dr. Elaine's Soil Food Web school to learn more.
Import dependent Asian countries like the Philippines are at a disadvantage as they struggle to secure more supply of inorganic fertilizers while struggling to combat malnutrition. Conscious effort must be done to use composted manure and nutrient-rich agrowastes using patented culture of microbes (Bioculum PL/AW) to help farmers produce their own natural fertilizers. Why waste wastes?