Ukraine invasion by Russian forces is creating significant turmoil in grain prices and uncertainty within the fertilizer industry. Fertilizer is a significant agricultural export for Russia, which represents approximately one-fifth of the global potash market. Russia is also responsible for 23 percent of ammonia and 14 percent of urea in the global market. Ongoing military action and resulting trade sanctions are causing concern for federalizer availability and pricing.
At a recent conference, Agriculture Secretary Tom Vilsack warned suppliers against taking “unfair advantage of these circumstances.” American farmers have already seen fertilizer prices ballooning over the past 18 months, raising concern about what the violence in Ukraine could mean moving forward.
“The U.S. fertilizer industry is committed to serving farmers and makes it unequivocally clear that ensuring grower access to the nutrients needed to sustain people around the world is of the highest priority,” The Fertilizer Institute stated in a press release. “Because of Russia’s large fertilizer production and its role as a global fertilizer supplier, the removal of Russian product from the global marketplace will have an impact on supply. Despite the benefits afforded by a robust U.S.-based fertilizer industry, prices for our products are driven by global supply and demand factors.”
At the same time, the Ukraine invasion also presents potential opportunities for American farmers. Ukraine is a significant supplier of wheat and grain. Continued violence in the region could have a significant impact on production and export opportunity. There have already been substantial shifts in wheat futures trading since the fighting began. The inability of Ukraine to meet grain demands in markets such as China, Turkey, and Indonesia could result in a greater demand on American producers to fill the gap.
Sanctions and other penalties leveled on Russia by the United States and other countries will continue to have an impact on the global fertilizer market. Analysts have indicated that the overall impact on trade will largely depend on which countries impose sanctions and how severe they are.