Rabat – Amid disruptions due to COVID-19 and the war in Ukraine, fertilizer prices are spiking as input prices are impacted by uncertain geopolitical trends.
Minneapolis-based independent agricultural data firm Data Transmission Network and Dataline (DTN) this week indicated that phosphate prices have reached an all-time high in an upward trend that is likely to end soon.
“The phosphorus fertilizer was 8% more expensive compared to last month and had an average price of $1,047/ton, which is an all-time high price in the DTN data set,” writes Russ Quinn at the DTN-linked Progressive Farmer news outlet.
A volatile market
Ahead of the spring planting season, high fertilizer prices are creating uncertainty for farmers and agricultural ministries around the world. Countries have been scrambling to find new reliable suppliers of vital fertilizers and their inputs, following the Russian military offensive in Ukraine.
The two countries are major suppliers of both basic foodstuff, and the chemical inputs required to produce the fertilizer that most of global agriculture depends on.
The impact of the conflict is felt around the world, from the west-coast of the US where prices have almost doubled in a year, to major agricultural producer Brazil, which is accused of continuing Russian fertilizer imports despite international sanctions.
The considerations for such politically controversial decisions appear grounded in practical needs as “delays or a lack of fertilizer would imperil Brazil’s summer grain season that will begin in the final quarter of 2022,” Reuters reported.
While prices for phosphate-based fertilizers peaked this week, prices for nitrogen fertilizer fell from their peak by record-numbers, after a gradual rally in recent years.
The rally “appears to be taking a breather,” Bloomberg analyst Alexis Maxwell has estimated, adding that he expects further volatility in European natural gas prices to continue to prop up nitrogen prices for the remainder of 2022.
Impact on OCP Group
While rising prices for vital fertilizer create uncertainty for farmers and governments, they could likely result in a long-term boom for Morocco’s phosphate and fertilizer industry. This vast industry, centralized in Morocco’s largest company OCP Group, makes up the country’s top employer and a key source for local innovation spending.
While market volatility is rarely desired by key players in any industry, the current stand-off between the West and Russia appears to be diminishing the reputation of Russia’s PhosAgro, OCP Group’s largest competitor in the East.
The Russian chemical company has often competed actively with OCP Group, yet Russia’s geopolitical actions in recent months are bringing into question the reliability of Russian supplies, likely reducing the company’s market-share in years to come.
