The world’s largest fertilizer firm is warning of global shortages, as supplies from Russia and Belarus are more limited than anticipated.
“Russia and Belarus are just enormous producers of fertilizer,” Nutrien Ltd chief executive officer Ken Seitz said on Thursday.
“There are export challenges in the region. That’s certainly going to have a material impact on the markets,” he said.
Photo: Bloomberg
Two of the biggest producing nations of potash — a key type of fertilizer — ended up exporting less due to trade restrictions and war.
Seitz sees shipments from Belarus at half those of last year, after earlier expecting them to be down by one-third to two-thirds, and Russian exports down by about 25 percent.
“The world is going to have to look to the other breadbaskets of the world to fill that supply gap for food,” he said.
A global shortage of fertilizer might seem like a distant problem to the billions of people who do not work in agriculture.
However, crop nutrients are critical to growing the crops that feed the world’s growing population.
Fertilizer shortages can lead to higher costs and lower yields, ultimately hitting consumers when food prices have soared.
About 60 percent of new production that was expected to come into the market over the next five years was in Russia and Belarus, he said, adding that it is unclear how much of that would come online.
Meanwhile, demand continues to rise as the world’s population grows.
The Saskatchewan-based company has said it would ramp up potash output capability to 18 million tons by 2025, a 40 percent increase compared with 2020.
If the market changes, the company can reevaluate additional production, Seitz said.
Fertilizer prices are falling from the highest levels seen in years, as farmers postpone purchases to await lower prices, creating gluts that are upending the market for crop inputs.
It is a reversal from earlier this year, when prices surged after Russia’s invasion of Ukraine threw the world’s crop-nutrient sector into disarray.
Potash had seen price increases because of sanctions on Belarus.
Farmers worldwide would need to restock nutrients after they applied most of their stored product this year.
Global shortfalls could linger well into next year, Seitz said.
“For 2023, we really don’t see any reason why that would change,” he said.
“As we watch the trade flows now — especially given where potash prices are at and have been — those producers are looking for every outlet that they can find and that they’ve now exhausted those outlets,” Seitz said.
Nutrien is seeing prepaid sales of fertilizer — where farmers buy ahead to secure product — about 15 to 20 percent higher than in 2020.
Farmers who did not buy this year and have used all their stored product are expected to jump into the market and send prices high again, Seitz said.
“We believe 2023 is not a demand concerned world, but a supply concerned world,” Seitz said. “There’s not gonna be enough potash to go around.”
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