Fertilizer Prices Heading Toward Record Highs Due To Series Of Black Swan Events

By Tyne Morgan

AgWeb.com

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."