Home News Michigan Ag News How Coronavirus Plays A Role In Fertilizer Pricing

How Coronavirus Plays A Role In Fertilizer Pricing

Nitrogen-fertilizer-application

Some parts of China are still under quarantine after the country has reported more than 80,000 cases of coronavirus. This work stoppage is putting a question mark on fertilizer supplies.

According to Sam Taylor, vice president farm inputs analysis for RaboResearch, China is the largest exporter of finished phosphates. Wuhan, ground zero for the virus, produces 14.7 million metric tons of finished products each year. Roughly 60 percent of those plants are offline right now.

“Of the remaining 40%+, some are running at full capacity, some are running at half capacity,” he said. “One of the big issues going forward is the labor constraints because there’s been a travel and logistics shutdown. Getting these plants back up to capacity is going to be a slow process.”

In the short term for phosphates, this will create a tightness in exports and supply, and we could see some higher prices for farmers. Taylor also said this situation also piggybacks on the “improved dynamic” from last year’s prevent plant acres. On the nitrogen side, there could be a positive story, since China is one of the largest importers of nitrogen.

“If China has a significant input economic impact, this is going to be deleterious to ammonia demand from China, and this could be downward in pricing pressure on ammonia and further nitrogen derivatives,” said Taylor. “We could see basically the converse with phosphates.”

Looking ahead to the next 30 or 40 years, there are a lot of unknowns. Taylor says his colleagues in China are saying that fertilizer producers who haven’t diversified into industrial production will feel some pain.

“We think that there could be some kind of change in the portfolio for these Chinese producers which could create a little bit of tightness of supply on a trend-basis going forward,” he said.”

RaboResearch isn’t expecting significant upward momentum for potash this year. Taylor says if you’re in need of phosphates, MAP or DAP, look at pricing sooner than later.