The world’s top fertilizer companies are bullish on key plant nutrients even as prices retreat from multi-year highs.
F Industries Holdings Inc., the world’s largest nitrogen fertilizer company, said supplies are still tight and doesn’t see a major lull in the market despite local flooding.
The conditions that have supported nitrogen prices over the past year — primarily lower operating rates due to high energy prices in Europe and Asia — show no signs of abating, Chief Executive Officer Tony Will said in an earnings release.
“We expect the global nitrogen supply-demand balance to remain tight going forward, with attractive margin opportunities for low-cost producers,” Will said.
Fertilizer prices are falling around the world as farmers balk at the high cost and postpone purchases, leading to floods that are upending the farm inputs market. It’s a reversal from earlier this year, when prices skyrocketed following the Russian invasion of Ukraine, throwing the global fertilizer sector into disarray.
According to Bloomberg’s Green Markets, weekly wholesale prices for US Corn Belt potash and Brazilian spot prices fell to their lowest levels in more than a year in the week ended Oct. 28.
Nutrien Ltd. released disappointing third-quarter results on Wednesday and lowered its global potash shipments forecast due to the impact of “higher-than-expected” inventory levels and “cautious buying in North America and Brazil” in the second half of 2022, the company said.
Still, according to the company, Nutrien expects that “robust” agricultural fundamentals will support increased potash consumption in 2023 and “pent-up demand will arise” as inventories are depleted and prices stabilise.
“Underlying demand drivers remain strong and global fertilizer challenges remain,” Chief Executive Officer Ken Seitz said in the statement.
Nitrogen prices have fallen along with European gas and suppliers are now reportedly dealing with customers waiting to buy in hopes of even lower prices, Raymond James Financial Inc. analyst Steve Hansen wrote in a Note.
“For potash in particular, international buyers have been strikingly emboldened by six months of sustained price declines, choosing to seize the time and delay purchases for as long as possible,” Hansen wrote.
Bloomberg.
