As China Stops Exports of Phosphate, what will be the impact on 11-52 Prices and Availability?

Phosphate Trends

Many may have seen these recent articles, pasted below. After years of exporting phosphate, and recent poor years in agriculture in China, they are stopping phosphate exports. How will this affect price, availability and logistics planning for phosphate users in North America? In conventional phosphate fertilizers, over the past 10 years or so, we have seen:

  • Florida under significant environmental pressure
  • Growing imports from Saudi Arabia and Russia
  • Steadily increasing prices in all fertilizers, especially MAP and DAP

Fertoz has rock phosphate available in powder and granular form. We blend with sulfur, alfalfa (for Nitrogen), humics, and we are studying biologicals.

Over the past 2 years, we have held our product prices flat.  With mines in British Columbia, Alberta, Montana and northern Mexico, and processing throughout the western regions, we can supply throughout the year to all regions in North America.  All of our products are registered for use organic production systems. We supply to sustainable, regenerative and restorative acres too. Because we simply excavator mine, crush, screen, and granulate, our products are low carbon emitting, and with good farm management practices, carbon neutral or able to sequester carbon.

In a conventional ag setting,  we suggest blending our powder or granulated rock phosphate at 20-30-40% blends with MAP.  Scientific studies show significant benefits:

  • our products blended with MAP are competitively priced
  • yields are equal to MAP alone or better in some cases according to research
  • reduced issues surrounding leaching, runoff, soil salinity with rock phosphate
  • the blends provide opportunity to reduce carbon emissions during manufacturing
  • reduce nitrate emissions on farm
  • opportunity to collaborate with Fertoz in carbon markets as we coordinate with manufacturers, distributors and growers, to quantify, track and trade carbon credits.  We are currently focused on voluntary carbon markets, and are developing and implementing protocols for verification in voluntary and regulatory markets.

Let’s talk about Rock Phosphate, Blends, Carbon, Organic Fertilizer and more!

Contact Our Organic Phosphate Fertilizer Company | Fertoz

China halts phosphate exports

China halts phosphate exports; fertilizer prices expected to soar (wisfarmer.com)

China is banning the export of phosphate, a major component of commercial fertilizer, through 2022.

“Fertilizer prices have increased dramatically in recent years, and the news coming from China will more than likely help this trend continue,” said Theresa Sisung, field crops specialist for the Michigan Farm Bureau. “Farmers should talk to their retailers sooner rather than later to discuss their options for purchasing fertilizer for their 2022 crop needs.”

According to John Ezinga, vice president of agronomy at Michigan Agricultural Commodities Inc., the move will adversely affect prices.

“Growers are going to feel it,” Ezinga said. “Look at your ratios on corn: N, P, K. It’s way out of whack right now.”

Prices of urea, DAP, MAP, and potash averaged $572, $702, $776, and $598 per ton last week, all of which are up 59% or more from 2020.

Ezinga said China last cut supply to this degree in 2008, when the country hosted the Olympics. Then, China reacted to a demand-driven market. Today, with the winter Olympics approaching in 2022, he said the market has changed but the problems haven’t.

“We’re in a trade war,” Ezinga said. “You’ve got a supply-restricted market today. Ten to 12 years ago, you had a demand-led market with some supply constraints. Logistics is a mess, but I feel pretty comfortable that we’re going to have the supply in the U.S. It’s just — at what price?”Early reports indicate China is restricting fertilizer exports to assure domestic supplies and take advantage of increased raw material prices.

As far as when the skyrocket fertilizer price trend bucks, Ezinga said there’s no timeline. “It’s going to turn when it turns,” Ezinga added. “And when it turns, it’s going to be ugly because there’s going to be a bunch of people who own a bunch of high-priced product, and then the supply constraints will get lifted, and everybody’s going to pay in excess. I think these prices remain out of whack through spring.”

Fertilizer Prices Soar Near 2008 Highs on Supply Shocks, Concerns Sprout Over Sourcing Enough for 2022 U.S. Corn Acres

Fertilizer Production Louisiana 092821

By TYNE MORGAN September 28, 2021

Fertilizer Prices Soar Near 2008 Highs on Supply Shocks, Concerns Sprout Over Sourcing Enough for 2022 U.S. Corn Acres | AgWeb

The fertilizer industry is swarmed with Black Swan events. From the impacts of Hurricane Ida to political and climate issues entangled in a cobweb of production slowdowns in Europe and China, the Black Swan events continue to stack up. 

According to Josh Linville of StoneX Group, on Monday, the Chinese government effectively banned phosphate exports through June 2022. The news comes as China’s production was already throttled by climate emission concerns from production plants. The impact is already being seen with prices, as China accounts for almost one-third of the world phosphate trade. 

Prices Near 2008 Highs 

The phosphate ban is just the latest in a series of events that are leading to a supply shock for fertilizer ahead of the 2022 growing season. And that supply shock is creating a price spike that can only compare to 2008, with concerns the most recent strains could cause prices to surpass the record-high fertilizer prices farmers saw in 2008. 

“In 2008, we had a little bit more of a lead up to it,” says Linville. “And we started from a slightly higher price. We started the 2008 saga closer to probably $350 a (metric) tonne NOLA urea, and we spiked out about $825. So, we are not at the historic highs yet, even though it feels like it. We’re not quite there. The problem with this one, though, is back in 2008, it was all demand driven. We never had problems finding supply, it was just, ‘What price are you willing to pay to get your hands on it?’ This one is much more supply driven.”



Supply Saga Stacks Up

The supply-driven factors continue to add up. In addition to a spike in shipping costs, energy prices are soaring this week, with natural gas prices spiking to more than $6 per metric million British thermal unit (mmbtu), nearing the 2014 peak. It’s a factor that could drive up costs for nitrogen even further this year as the supply issues seem to be appearing from nearly every angle, with a laundry list of issues impacting fertilizer availability and prices.

“Hurricane Ida destroyed production down in the Delta,” says Linville. “We have inland production points that are having problems because of repairs that were made during the COVID situation. We’ve got China, the world’s largest urea producer, who has cut exports because they’re keeping it at home for their producers. You’ve got European production having issues because of natural gas price. There is serious, serious concern. We’ve been crying wolf for a lot of years that ‘Hey, there may be a season we can’t find product.’ But we always find a way. This one has a lot of the markings that say this could be the nightmare.”

Gary Vogen with Yara told The Scoop that on a global scale, fertilizer producers have ramped down volumes to reduce their exposure to the high prices of natural gas for nitrogen production.

“In a normal situation, if you had a price spike in Europe, the rest of the world would compensate. But the supply chains are all limited now,” he says. “As a result of strong demand last year, a shift over the past 10 years to put more domestic production closer to the user, and potential tariff limitations on certain products, the long chain—the pipeline—is quite empty.”

Vogen says the first quarter of 2022 shows the first window of opportunity for resolving the high natural gas prices, but fertilizer prices will also continue to be driven by other global influences.

Finding Fertilizer for 91 Million Acres of Corn

The supply shocks are turning into a critical situation. As plants continue to throttle back production around the globe, there are fears there won’t even be enough fertilizer to supply the 91 million acres of corn currently penciled in for the 2022 season.

“It will be available, but at a price,” Linville says after a long pause when answering whether there will be enough fertilizer supplies in the U.S. “The scary proposition is, ‘What is the price it’s going to take to find enough supplies?’ That’s where we start getting these areas where we might challenge 2008 price highs. We might need to start outbidding not only the supplies that are here in the U.S. North American market, we may have to start outbidding the rest of the world for that same nitrogen unit to get what we need to raise our 91 million acres of corn. And that’s the scary thing.”

As North America battles to find the supplies to fuel not just U.S. corn acres, but Canada as well, the bidding war continues among those trying to source enough supplies as retailers and ag companies see a global-wide chess match heat up.

“Retailers can’t always guarantee that product is available if a customer knocks on the door to buy it today,” Vogen says. “Even with significant planning, unexpected influences can disrupt and delay the supply chain process. Historically, the industry has made it easy to buy one or two times a year, but that may be not the best case going forward.”

Vogen says Yara is encouraging ag retailers to share the facts with farmers to help them understand what’s causing the price increases, as ag retailers are also battling the constant questions of not just supplies, but prices with no clear timeline on how long they will last. 

“We’re adjusting on the fly at all times,” Vogen says. “We will continue to evolve; there is no quick answer to this.”

Timeline of Fertilizer Supply and Price Woes 

Linville says he doesn’t see a lot of relief in nitrogen prices between now and next spring, and phosphate and potash will be heavily dependent on what farmers decide to apply to their ground this fall. And as overall supplies continue to see pressure, the only thing that would pressure prices at this point would be widespread demand destruction.

“A lot of people are saying at these kind of input prices, I’m going to cut my corn acres because soybeans and some other crops obviously don’t have near the need for fertilizer, so I’m going to switch,” Linville says. “The problem is, let’s say we have a scenario where a lot of the farmers do sit there and decide to switch to soybeans, and that number drops from 91 down to 85 or 87 million acres of corn. All of a sudden, you’ve got a corn market that starts battling back, and the way it does is with higher prices. Now you’ve got a situation where it’s just-in-time demand, and from a logistical standpoint it is the other scenario that keeps me up at night. It’s a bad situation.”

Overall, Farmer Mac economist Jackson Takach says as agricultural products remain in higher demand, and shipping woes take over the supply chain, a timeline of supply issues for all of agriculture could last well into next year. 

“It’s still incredibly expensive to get containers to move product, if you can even get the containers to move the product,” he says. “So, I look at that as a big potential headwind for the sector in 2022. Either we see a pullback from global spending on food, or you see the inability or the cost to ship that food starting to rise and put downward pressure on profitability.”