Will there be enough fertilizer for fall nitrogen applications in rural America? The war in Iran and pressure on the Strait of Hormuz are still limiting shipments. Josh Linville, the vice president of fertilizer for StoneX, said there’s a lot of pressure on world supplies right now.
“Yeah, it’s a big deal, just like it has been since February 28th. I mean, you sit there, and you just take a look at it, just a snapshot of the marketplace, three of the world’s biggest urea exporters-Iran, Qatar, Saudi Arabia-are behind the Strait (of Hormuz). The same three are big anhydrous exporters. Saudi Arabia is a major phosphate exporter out there. So, just on the surface, just looking at those three, that’s a massive loss. And with the attacks that went on this weekend, it doesn’t look like it’s improving anytime soon. But the problem is, it’s always the devil’s in the details, right? It’s the fact that gas-so much gas comes from that body of water, and that gas goes to feed nitrogen production facilities around the world. That helps support or hurt global gas prices around the world. That’s why we’ve seen a little bit of European production go down.”
He said sulfur production is worse.
“What’s worse is the sulfur situation for phosphate production. Yeah, it stinks losing Saudi Arabia, but worse. Strait of Hormuz has about half the world’s tradable supply coming from that body of water, and without that supply, other manufacturers like ours here in the U.S., production rates suffer because there’s just not enough of it, and/or the price is so high it doesn’t make financial sense, and that’s really been what’s been rubbing people the wrong way as they’re sitting and looking at phosphate prices and say demand’s down, we’re not using it. How’s the price still high? Well, if our price starts to slip because there’s not a whole lot of demand out there, more production shuts down because that price floor is so stinking high. It’s just normal market things that help drive prices lower aren’t working because that cost of production thing is sitting there weighing on us real heavily.”
The tariff battle between Canada and the U.S. is having a significant impact on potash, and the future depends on a successful USMCA renegotiation.
“You’ve got to remember when you look at potash, in the U.S., we produce very little of what we need. We do have some production out there, not to sit there and say anything bad about those guys, but when you look at our overall demand, we don’t produce very much of it. There’s a heavy reliance on imports, and you look at all the imports coming through the U.S. marketplace, 90 percent of that comes from Canada, so we’re watching this trade agreement very closely. Fortunately, for all the bluster on both sides of the aisle, both sides of the border, we’ve never seen anything actually go against potash yet. And therein lies our fear: if this trade agreement, if it continues to fall apart, we can’t find common ground, and we can’t get something put in place, I think both sides of the border go after potash. I think both sides of the border know how important the other side is for potash flows.”
Again, Canada supplies 90 percent of the potash used in the U.S., so interruptions hurt both sides of the border.