(Bloomberg) — Fertilizer is getting harder to find just as farmers are getting ready for planting. And now Russia’s invasion of Ukraine is injecting even more uncertainty into then already tight crop nutrient market.
Russia is a low-cost, high-volume global producer for all major fertilizers, and it’s the world’s second-largest producer of potash after Canada. While sanctions haven’t yet hit Russian fertilizer companies, more restrictions could be coming. Just Wednesday, the U.S. said it will target Russia’s oil sector by restricting exports of technology related to the energy sector.
Disruptions in the global fertilizer trade will mean higher costs for farmers across the globe, and in turn more food inflation at a time when global food prices are at the highest in a decade.
Inventories will be “as low as we’ve ever seen” heading into the Northern Hemisphere’s summer, major producer CF Industries Holdings Inc. Chief Executive Officer Tony Will said at a conference Wednesday.
Read More: Soaring Fertilizer Prices Are About to Increase the Cost of Food
Fertilizer prices have already shot up across the board, thanks in part to a gas crunch in Europe that forced some producers to dial back or shut down operations. Elevated freight rates, increased tariffs, extreme weather, and sanctions on Belarus, which accounts for about a fifth of the global supply of potash, are also factors.
Farmers could start using less fertilizer as prices rise, said Ken Seitz, interim CEO of Nutrien, the world’s biggest crop nutrient company. In addition, supplies for seeds and other chemicals like pesticides are also “extremely tight,” Corteva Inc. CEO Chuck Magro said at the conference. The market will be volatile for some time, he added.
©2022 Bloomberg L.P.