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Rabobank report: ‘The Russia-Ukraine war’s impact on global fertilizer markets’

Rabobank’s RaboResearch – Food & Agribusiness team released this research report yesterday. They say in the introduction that higher fertilizer prices and/or a shortage of fertilizer supply resulting from the war in Ukraine will not have an immediate impact on food prices and/or food production.

Currently, the fertilizer market in the northern hemisphere is relatively quiet. All transoceanic flows for the upcoming northern hemisphere spring season have already taken place, and movements are now primarily at the local level: from the import ports and/or domestic production locations to farm fields.

The first crop-growing regions to be ‘at risk’ are India and Latin America. India is partially out of danger, but Latin America is highly exposed. Potash availability for soybean production might be compromised, as Belarus and Russia account for 40% of the world’s potash production and exports. Consequently, Brazil’s 2023 soybean harvest might be the first crop to experience direct negative impacts from Russia’s war in Ukraine.

The good news is that Latin American markets don’t need fertilizer in their fields until September – which means fertilizers need to arrive at Brazilian ports in July-August and there are still three months to work out a solution. A careful assessment of the 2023 cropping season, however, is necessary.

Further down the road, the 2023 cropping season in the northern hemisphere could face some disruptions. There are four main cropping areas in the northern hemisphere: North America, Europe, the former Soviet Union, and China. Regional trade is still ongoing in each of these markets. But with the exception of the former Soviet Union, this regional trade no longer relies on fertilizers that must be shipped from Russia or Ukraine.

However, the EU relies heavily on a ‘special’ N fertilizer: calcium ammonium nitrate (CAN). Instead of a global market, the CAN market is regional, and Russia and Ukraine account for almost 50% of global CAN exports. Moreover, domestic production of CAN relies on (Russian) natural gas.

Source: Rabobank. Read the full report here
Image: Courtesy Jing from Pixabay
Related: As sanctions bite Russia, fertilizer shortage imperils world food supply

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