US Fertilizer Imports Derailed by Global Supply Issues | StoneX

US Fertilizer Imports Derailed by Global Supply Issues

Key Takeaways:

Canadian rail strikes threaten potash supply chains in the US
Chinese urea exports down to a fraction of previous levels
Domestic fertilizer manufacturers benefit from low energy costs and high nitrogen prices

Production deficits in the global supply of nitrogen fertilizers are expected to endure according to Josh Linville, who outlined the myriad geopolitical issues creating unease in the fertilizer markets during a recent interview on AgriTalk Radio.

Our Vice President of Fertilizers also shared his perspective on potential worst-case scenarios regarding Canada’s ongoing rail dispute and revealed how strike action could further squeeze the already-constricted supply of fertilizer into the US.

Approximately 60% of goods imported from Canada arrive in the United States by rail.

“From a fertilizer standpoint, Canada is the world's largest producer and exporter of potash,” Linville explained. “Start thinking about how many trucks it would take to make up the difference. You're not talking hundreds of thousands - you’re not talking millions - you're talking tens of millions of tons. If the rail were shut down, you’re talking about digging a hole that’s going to take you a while to dig out of.”

Further afield, a shift in China’s fertilizer policy to favor domestic production also threatens to impact urea supply chains around the world – with no indications of a return to previous export levels apparent. Chinese urea exports totaled just 79,000 tons in July, down from a historical benchmark of roughly 5,500,000 tons per year.

“That’s two vessels. It is nothing. They make more in a day than what they exported during all of July,” said Linville. “I keep hoping that the data’s going to come in and show that they have completely flipped the script and started exporting heavily again…as of July, it hasn’t given yet.”

The outlook for farmers seeking an alternative to granular urea is bleak too: “Each nitrogen product of the major three that we track has got supply issues around the world. Urea we just talked about – it’s China. For UAN – you’ve got Trinidad. They’ve had gas curtailment issues that has affected their production, and [in the] the EU region, high natural gas prices continue to keep them at about 75% of normal production, which means they're an unnatural importer of anhydrous [ammonia].”

The ongoing global supply issues represent something of a boon for domestic US fertilizer manufacturers, however, who are maximizing profits thanks to a combination of low energy costs and high demand.

“Margins are very, very good across North America. We're talking about the cheapest natural gas prices in the world, and nitrogen values are still much higher than we expect them to be, so yeah - great days for manufacturers.”

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To listen to the original interview, click here.

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