Reuters
2022.08.03 01:57

Mosaic, CF Industries expect global fertilizer supply to remain tight

By Ruhi Soni and Tom Polansek

By Ruhi Soni and Tom Polansek

Aug 2 (Reuters) - CF Industries Holdings Inc (CF.N) and Mosaic Co (MOS.N) said on Tuesday they expect tight supply for fertilizers to persist as war in Ukraine, considered the “breadbasket of the Black Sea”, has disrupted crop supplies and aggravated soaring food prices.

Mosaic noted that global crop yields are tight due to the Ukraine war, high temperatures in Europe and the United States, and signs of drought in southern Brazil.

“Each of these issues alone can have a material effect on global crop production. But together, the risk to food security is significant,” said Mosaic chief executive James O’Rourke in a post-earnings call.

Prices of crucial crop nutrients like potash, phosphates and nitrogen have surged after Western sanctions on Russia and Belarus, two of the world’s largest fertilizer powerhouses.

Supplies of fertilizers from Russia, outside of ammonia, have returned to near-normal levels, CF Industries executive Bert Frost said.

Frost’s comments echo those of Rourke, who said Russian potash is finding its way into the market, especially reaching Brazil, India and central America.

However, Belarusian potash has had very little comeback, Rourke said, adding Mosaic still expects a shortfall of about 8 million tonnes this year.

CF Industries CEO Tony Will said global market for liquefied natural gas will remain tight over the next few years as Europe and Asia compete for scarce cargoes, keeping prices high in those regions.

Natural gas is used as feedstock for making ammonia, needed for nitrogen fertilizers.

There is not enough ammonia to go everywhere it is desired, so demand will need to decline temporarily, Will said.

Mosaic said global fertilizer demand in the first half of 2022 was down about 10% from the same period last year, as high prices forced farmers to ration their supplies.

Shares of Mosaic and CF reversed morning’s losses and were up about 4% and 5%, respectively, in mid-day trading.

Fertilizer shortages stoke surging food inflation

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