It’s a surprise to only a few at this point to hear we’re currently at a 20-year high in the fertilizer markets.
The reasoning comes from a combination of things, but as Ryan Furtas, market analyst with Alberta Agriculture and Forestry explains, a hike in crop prices, an increase of feedstock costs, and as we saw in the latest jolt, export restrictions have driven up the price of nitrogen.
The pressing question for many is when can we expect these prices to drop? With the volatility of the markets, Furtas says it’s difficult to put a number on anything, but it’s pretty safe to say we’ll see elevated levels throughout the winter.
“If you look back in history, the prices have declined through the winter at times. We’ve seen a little bit of softening in some of the feedstocks, natural gas prices recently. Whether you know if that sustains and we have a mild winter in some of the more populated places, that will lessen demand for some of the feedstocks there,” Furtas explains, adding the “lessening demand could create less bottlenecks come spring time, but that’s about all we have for a glimmer of home right now.”
When looking at the short term fertilizer markets over the next few months heading into the North American planting season, Furtas says it seems like “the damage has already been done.”
“Unless energy markets increase, or there could be some shocks yet throughout the winter. I don’t want to say that it’s done with, but everything seems to be built in for the time being.”
When specifically looking at trade and the nitrogen markets, it’s crucial to look at urea, as it’s the most traded commodity of the nitrogen products, says Furtas.
“It’s about 50 million tonnes per year traded, and Russia, Qatar, Egypt, China, and Saudi Arabia account for over half of that. On the import side, there’s India and Brazil, and then there’s some smaller players like Turkey and Australia also chipping in on the import side for urea,” Furtas says.
Looking at our neighbours to the south, Canada is the loan destination for urea exports to the United States. However, as Furtas explains, shipments to the U.S. have declined over the past few years, but analysts are predicting a hike this year.
“Urea exports have really declined in the last three or four years because of the U.S. production increasing. This year, it’s looking to be probably quite a bit more than the last couple years — that has been about 450,000 tonnes per year. This year, it seems to be on pace for about 100,000 more, so about half a million tonnes — 550,000 tonnes of urea going down to the U.S,” he notes.
Check out the full conversation with Ryan Furtas and RealAgriculture’s Kara Oosterhuis, below: