Global fertilizer prices fall as flooding occurs after farmers retreat

Fertilizer prices are falling around the world as farmers, balking at the high cost of nutrients, hold back on purchases, choking demand and causing floods that upended the farm inputs market.

Fertilizer prices rose to record highs earlier in the year after sanctions on Belarus, a major producer, and Russia’s war in Ukraine pushed up fertilizer prices. This prompted global fertilizer companies to increase their purchases and move large volumes of products to avoid supply chain problems and trade restrictions in export markets like Russia.

Such moves have led to bloated fertilizer stocks in some key regions and farmers are simply not buying – a situation that is now weighing on the market. The reversal is occurring in both the US, a major fertilizer-buying nation and the world’s largest corn exporter, and agricultural powerhouse Brazil, the No. 1 supplier of soybeans.

“Farmers are pulling back on the expensive input,” said Bloomberg Intelligence analyst Alexis Maxwell. “Global demand for ammonia, phosphate and potash has been declining since the beginning of the year.”

A weekly index for the common nitrogen fertilizer urea in New Orleans fell 3.2% on Friday, continuing a month-long downtrend as US farmers wait to see how low prices could fall. Brazilian farmers are also halting purchases, driving down prices while fertilizers pile up.

According to Bloomberg Intelligence, global nitrogen prices are still trading nearly five times the historical average.

Those in the fertilizer industry bet farmers would buy the crop supplies given how high grain prices are in a world facing shortages. However, as farmers saw crop prices fall from their peaks, they began to rein in spending, reassessing decisions about fertilizer applications, supplies and the impact on yields for future crops. For example, while corn farmers need to apply nitrogen every year, in the US they don’t have to do it often in the fall.

The start of the fall fertilizer application season in the US hasn’t been great, said Josh Linville, StoneX’s director of fertilizers. The market could see many growers looking to buy nitrogen in the spring and the market could struggle to meet that demand, he said.

Brazil, the world’s largest importer of fertilizers, faces similar circumstances. The country imported a record amount of fertilizer this year to ensure farmers have enough inputs to expand their acreage.

“The record pace of imports this year filled warehouses, leading Brazil to re-export the surplus,” said Maisa Romanello, fertilizer analyst at Safras & Mercado. This is “internal and international pressure on prices as Brazil imports smaller volumes in the second half of this year”.

Fertilizer shipments in Brazil fell 8.7% between January and July compared to the same period last year, according to the Brazilian National Fertilizer Association. For the year as a whole, the industry group sees a drop in deliveries of between 5% and 7%.

Meanwhile, fertilizer prices in Brazil have fallen by almost half from April highs, leading some to question how far they can fall.

“Prices of some fertilizers are well above previous years,” said Jeferson Souza, fertilizer analyst at Agrinvest Commodities in Brazil. “Farmers see the price drop and continue to wait to make purchases.”

Bloomberg

https://www.independent.ie/business/farming/tillage/global-fertiliser-prices-fall-as-gluts-emerge-after-farmers-pull-back-42078255.html Global fertilizer prices fall as flooding occurs after farmers retreat

Fry Electronics Team

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