October 11th, 2024

Price volatility in fertilizer as Russian sanctions escalate


By Al Beeber - Lethbridge Herald on March 4, 2022.

Herald photo by Al Beeber Agronomist Jason Trowbridge says the invasion of Ukraine could be a concern for farmers in light of how much fertilizer is supplied to world markets by Russia.

LETHBRIDGE HERALDabeeber@lethbridgeherald.com

Fears of a global fertilizer shortage due to the war in Ukraine haven’t gone unnoticed at Ag-Expo which runs until today at 5 p.m.
Sanctions against Russia by western countries could impact supplies since Russia is a major exporter of fertilizer.
The conflict has also prompted wheat futures to skyrocket since Russia and Ukraine are both major exporters of that grain. These high prices, according to a Canadian Press story this week, will increase pressure on the price of fertilizer because farmers may plant more acres of wheat.
“The problem is that Russia is a supplier into the world market of nitrogen, phosphorus and potassium and so with the sanctions, if we aren’t allowed to buy Russian, any of that fertilizer that comes to market we can’t touch it. Is it a problem? We don’t know yet,” said Jason Trowbridge, an agrologist with Growwise Agronomy whose was working at the booth of OMEX Agriculture, a company that offers nutrition and advisory services to Canadian farmers.
“Whatever they sell into the world market is going to have to be made up somehow. So the unknown factor about this, in my opinion, is China. They also produce some but they’ve been holding theirs this year; they haven’t released any production to the world because they’ve been holding it all for domestic use. Will they buy from Russia because they’re not bound to NATO sanctions? They do whatever China wants to do. That’s kind of the wildcard,” said Trowbridge.
Trowbridge said everything went up by $100 a ton because of speculation but nitrogen has traded lower since.
“There was the initial fear; it’s come back a little bit but it definitely I think limits the downside potential we have for fertilizer. I don’t think it will raise costs too much more because I think we’re pretty much at the cap of what we can tolerate,” he added.
If grain prices hadn’t been so high, farmers “would have pulled the pin” on fertilizing, he said.
Russell Clark, OMEX territory manager for Southern Alberta and the Peace region, added “we can tolerate this cost for a year or two.”
Trowbridge said grain prices are at record highs: “we’ve never seen some of these prices ever.”
The concern for farmers is if they have to face another drought like last year’s which was a record, Trowbridge said.
“This is the big thing. Last year was a record drought; more acres in Western Canada than ever before had poor crops and because farming is such a slim margin gain, a lot of those acres were already pre-contracted at lower prices than came to fruition. So farmers were forced to sell last year at the contracted prices. Some of them didn’t even have enough crop to cover their contracted prices. They had to buy those contracts out at the higher prices” and ended up losing money, Trowbridge said.
He’s told all his clients not to pay high fertilizer prices without locking in a portion of their production at the higher grain prices.
“So this is my concern – that farmers get hooked for paying high prices for input and then something happens. We all have a good price and the price goes back to normal,” which means farmers are facing another potential loss.
“We don’t know what yields are going to be because it’s so weather-related. So my advice to farmers is sharpen your pencil, don’t not fertilize but make sure they’re working with somebody who can get their efficiencies up.”
Calgary-based Jim Zimmer of FBSciences, who was filling in at the ATP Nutrition booth, said “I think something is definitely not normal and what’s the new normal look like today and into the future? It’s a real concern for farmers but what I see is a lot of farmers are still going to put their base down, maybe reduce it a bit but they’re looking at newer technologies, too. And what we sell is bio-stimulants and biology to activate and enhance the fertilizer they put down.
“The efficiency of fertilizer can definitely be improved because generally speaking, efficiency depending upon the farmer, can be in the range of 30 to 40 per cent. So there’s a big upside to increase efficiency. And I think farmers are really talking about that more than ever. ‘How do I increase my nutrient efficiency – the nitrogen, the phosphorus, the potash I’m putting down to get more of this nutrition into the plant?'” said Zimmer.
“Out of all this I really think it’s brought it to the forefront. There is a concern about supply. Am I going to get it? I used to be able to keep track of everything and now what the hell is going on? Wheat prices went up because of Ukraine and Russia’s cut off exports, China’s cut off exports. I think a lot of farmers have a position on their fertilizer right now and they might be OK; hopefully they can get their supply this year but what is next year? What does the year after look like? It’s got them thinking about long-term,” said Zimmer.
So farmers have to not only look at costs but also efficiency, he said. ATB Nutrition is a company that focuses on specialty nutrition including bio-stimulants and microbes.
“Farmers are quite aware of this. They’re moving into other products from a biological end that are helping the efficiency and helping soil balance,” Zimmer added.

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