Fertilizer prices have been on an upward trend over the past year. The Russia-Ukraine conflict has further complicated the global market. A major commodity rally in corn and soybeans, sanctions on Belarus, and China stepping away from the export market all contributed to the rising prices. Vice President and Senior RaboResearch Analyst for RaboAgrifinance, Roland Fumasi said there are multiple factors that will dictate prices of fertilizer moving forward.
“Before this ongoing conflict we were expecting China to come back into the export market later this year, especially for urea and phosphates. So that would help ease prices a bit,” said Fumasi. “The other thing to keep in mind is that there’s going to be some increased capacity on the African continent that we’re looking at too, we thought might help the global supply situation.”
Approximately 40 percent of potash exports originate from Russia and Ukraine. Russia is also a significant supplier of ammonia, which Fumasi notes has the most fragile supply chain due to the infrastructure related to production. Prior to Russia invading Ukraine, prices had been projected to come down by the end of 2022 due to other factors in the global market. “We could see later this year maybe fertilizer prices get a little bit better, but it’s going to depend on this conflict in the Black Sea region; how far it goes, how long it lasts. So, it’s a bit early to tell,” Fumasi noted.
The Russia-Ukraine conflict has the potential for keeping fertilizer prices high, in part due to disruptions in the movement of natural gas, a critical component of fertilizer production. Logistics have also been thoroughly disrupted due to the conflict, with the conflict preventing fertilizer from coming out of the Black Sea region. “There are ships that have been sunk already. The insurance costs to get a ship into that region right now are so astronomical most folks are just going, ‘no, we’re not going to go in.’ If ships can’t go into the region, they can’t bring anything out,” Fumasi explained.
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