China is one of the world’s biggest suppliers of fertilizer. However, China has pulled back in recent years on the amount of exports, preferring to keep more on hand for domestic use.
“Every time we see updated operating rates in China, they remain extremely high, which means that the product is being produced in-country. And that brings the question of what are they doing with all of it? Where is all this product going? They can’t hold five-plus million tons and just create this storage. I personally believe – and listen, this is China, we don’t ever know. It’s always educated guesses if we can even call them that. But when I look at China, we have seen that the government has kind of started to tell its people to listen. We need to be less reliant on the world. We need to produce our own food. How do you ramp up yields? Well, you fertilize more. So, I think just an increase in domestic demand could soak up a lot of that product that they would normally export. We have been hearing that storage is near record highs or at or above record highs, and that has led to some speculation that we will see some exports be allowed here fairly shortly.”
He says even if China eventually ships out excess fertilizer that it can’t store, that still means the world’s biggest exporter will likely be missing for at least half of 2025. What should farmers be thinking about for this fall and next year’s applications?
“So, from a farmer’s perspective, you are spending far more of your bushels of corn to pay for that DAP. This is the market’s way of trying to kill demand. And so, not to say this improves in the years to come. I hope that it does. I’m staying hopeful this all corrects itself and gets back to some decent values. But there needs to be some hard decisions. And I think one of those things that you need to have an idea of is what I truly need to raise next year’s crop?”
Linville said China may not be holding that much fertilizer off the world market because of U.S. tariffs.
“I think it’s more domestic policy. A lot of folks have been trying to tie this back to the Trump administration’s kind of economic war on China, parties like that. But again, the phosphate flows. When you look at it, those export flows started to flow significantly in early 2022, when global prices spiked the last time. And so, this is a situation of play. This is a domestic Chinese political strategy, again, to keep tons at home, prices low. Now, to your point, I believe part of it is an effort to ramp up production of foods in their own areas, so they don’t have to rely on Western countries like the U.S. Part of it could be that production rates are down on phosphate. If you look into the sulfur market, there have been a lot of supply and price issues there, which may be making it kind of uneconomical. And the third, and something that a lot of people kind of squint at you when you talk about, is battery manufacturing. The current adopted manufacturing of batteries is phosphate-based. And so, you know that China is a major player in that field. We could be seeing a lot of phosphate being pulled away from agronomic uses or pulled away from exports, and being placed into that industry.”