Russia Suspends Fertilizer Exports, Brazil Falls Into Fertilizer Crisis

The Russian Ministry of Trade has proposed a full suspension of fertilizer exports earlier this month. Some experts say that fertilizer prices, especially potash, will fluctuate.

It is understood that the potash exports from Russia and Belarus, which account for about 40% of the total global exports, with China, Brazil and India as the main demand side. The rising cost of shipping due to the Russia-Ukraine conflict, the strong demand for potash in Brazil, and the overlapping supply time between China and India may lead to high potash prices.

Russia is China's largest source of potash imports, with data showing that China's potash imports reached 7.57 million tons in 2021, of which about 30% came from Russia. 2022 China's large contract price for potash is at US$590/ton, up US$343/ton year-on-year, a new high in 10 years. Russian potash may be compensated by border micro-trade, and the amount of potash imported by border micro-trade is expected to be elevated this year.

Brazil relies on imports for 85% of the country's fertilizer, about 1/5 of which comes from Russia. As the world's largest producer of coffee, soybeans and sugar, as well as a major producer of corn and beef, Brazil is currently looking for new sources of fertilizer supply.

Although Brazil's agriculture minister said domestic stocks can last until October, the Brazilian National Fertilizer Association warned that stocks are only enough to last three months. The rising cost of fertilizer will directly lead to the inability of Brazilian farmers to increase food production, which in turn will not be able to make up for the shortfall caused by the reduction of food production in Ukraine and Russia.

In fact, global fertilizer supplies were tightening long before the Russian-Ukrainian conflict erupted. 2021 saw prices for some fertilizer products more than double. Ammonia, which is needed to produce nitrogen fertilizer, is synthesized primarily from natural gas, and rising natural gas prices have limited ammonia production. And when Hurricane Ida hit the U.S. last September, the world's largest integrated nitrogen fertilizer plant in Louisiana shut down, sending nitrogen fertilizer prices off the coast of Mexico soaring to a near-decade high at one point.