Foreign media news on November 14: the price of chemical fertilizer has risen to an unprecedented level, indicating that the cost of farmers and consumers around the world is rising.
On Friday, the green market North American fertilizer price index (gmnafpi) rose 4.4% to US $1094.35 per short ton, exceeding the record set a week ago. New Orleans urea, a nitrogen fertilizer popular with farmers, rose 8.3% to US $812 per short ton because CF Industrial Holdings, a major fertilizer producer, warned of a continued shortage of supply.
Due to the energy shortage in Europe, the price of natural gas rises, and natural gas is the main raw material for the production of chemical fertilizer, which also leads to the soaring price of chemical fertilizer. China and Russia restrict fertilizer exports to ensure adequate domestic supply. In the United States, the consumer price index (CPI) rose 6.2% year-on-year in October, the worst inflation since 1990.
The United States is a major importer of chemical fertilizers, with 20% of urea and 40% of ammonium nitrate imported from Russia. The surge in fertilizer prices also boosted the prices of crops from grains to coffee, as traders worried about supply shortages and soaring production costs that could damage crop yields. With the rising cost of fertilizer and other inputs, American farmers will transfer 2.5 million acres of farmland from corn to soybeans next year. Soybean is less dependent on chemical fertilizer than corn. Analysts said that the price of ammonia fertilizer has increased by 65% since September, and there are signs that farmers are unable or unwilling to absorb the rising cost of ammonia fertilizer.
CF Industrial Holdings said that at a time when corn and soybean inventories have been at multi-year lows, nitrogen fertilizer supply is generally tight, which is expected to affect global grain production in the next quarter.
Since the third quarter, due to the shutdown of the plant caused by Hurricane IDA, the cost of natural gas has reached a record, which has hindered nitrogen production in the United States and Europe. At the same time, the major producing countries China and Russia have imposed restrictions on the export of chemical fertilizer – contributing to the multi-year high price of nitrogen fertilizer and limiting the supply of major agricultural areas such as Brazil and India. Porter frost, senior vice president of marketing and supply chain of CF Company, said that the demand for chemical fertilizer in 2022 is expected to far exceed the global supply, and the global grain production may be affected. The potential of strong demand for chemical fertilizer will continue beyond 2023. Due to the limited supply, some areas cannot obtain enough chemical fertilizer, resulting in the decline of crop yield. If this happens, strong demand will continue into the next few years, as more than two growing seasons are required to replenish global grain and oilseed stocks. For major agricultural centers that rely heavily on imports, such as Europe and Brazil, the direction of nitrogen fertilizer exports depends on profit margins.
Recently, the Russian government has issued the export ceiling of nitrogen-based fertilizer, diammonium phosphate (DAP), monoammonium phosphate (map) and compound fertilizer, which is valid from December 1, 2021 to May 31, 2022. Trade data show that from December to may 2020, the export volume of urea, ammonia fertilizer and urea ammonium nitrate solution (UAN) in Russia was 6.43 million tons. The export ceiling set by the government is 5.9 million tons, which is equivalent to a monthly decrease of about 90000 tons in the export volume of three products. Brazilian and European farmers have to compete for limited fertilizer.
The decrease in fertilizer supply comes as farmers in the Black Sea and Europe prepare to plant crops in 2022 / 23. After the tight supply of chemical fertilizer this year, wheat production next year may be affected. Agritel, a consultancy, estimates that with the reduction of fertilizer use, the wheat output of the world’s top eight wheat exporting countries may be only 398.1 million tons next year, lower than the baseline forecast of 409.4 million tons, which may encourage farmers to grow crops with low fertilizer intensity, including sunflower seeds and rapeseed.
However, the demand for ammonia fertilizer in the United States will reach the strongest level since 2012, which means that the corn production in the United States will be high again. Frost said that the demand for nitrogen fertilizer delivered in the first and second quarters of next year further supports the expectation of a bumper corn harvest in the United States in 2022. CF estimates that the corn planting area in the United States next year will be about 93 million acres. He is not. The supply of chemical fertilizer next spring can meet the demand for chemical fertilizer. Imports are increasing, and domestic production will recover.
Source: beer industry information network
Post time: Nov-18-2021