RE: Q127 Feb 2022 07:23
Fertilizer Shortages Due to Russia-Ukraine Tension May Hit U.S. Growing Season
Expensive fertilizer means higher production costs for farmers growing food
ByJen Skerritt and Elizabeth Elkin
February 23, 2022, 8:49 PM GMT+2Updated onFebruary 23, 2022, 9:25 PM GMT+2
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More price hikes for fertilizer are on the horizon as the Russia-Ukraine crisis adds to fears of global shortages, stoking concerns about rising food costs.
Russia is a low-cost, high-volume global producer for all major fertilizers, and it’s the world’s second-largest producer after Canada of potash, a key nutrient used on major commodity crops and produce. The tension in the region as well as sanctions on Russia could hurt trade flows. U.S.-based Mosaic Co., a major fertilizer producer, warned of potash shortages in a call with analysts Wednesday.
It all points to rising costs for farmers, who are scaling back on fertilizer use. That will potentially trigger lower crop yields and push prices for food even higher around the world. Food costs are already the most expensive in a decade, according to a United Nations gauge.
“Fertilizer prices are at all time highs, this is really just adding more pressure,” said Patrick Donnelly, senior analyst at Third Bridge. “It’s a very real possibility we see shortages for this coming year especially heading into the North American growing season.”
In the latest developments, Russia faces the threat of further sanctions following its recognition of two breakaway regions in eastern Ukraine. President Vladimir Putin says he remains open to “diplomatic solutions,” but insists Russia’s interests and security must be guaranteed. Meanwhile, Ukraine said banks and ministry websites suffered another cyberattack Wednesday. Kyiv is seeking to declare a nationwide state of emergency which could see officials impose restrictions on movement for at least 30 days.
Also contributing to turmoil in fertilizer markets is the force majeure declared last week by a Belarusian potash miner largely due to U.S. sanctions and being cut off from global markets. Belarus accounts for a fifth of global supply. Global potash contracts have already settled at the highest price since 2008.
Costs for other fertilizers have been skyrocketing because of high prices for natural gas, an ingredient, forced some European plants to halt or curtail production.
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