Russia’s invasion of Ukraine could lead to a prolonged global supply crunch in agricultural fertilizers, industry officials said, prolonging the current shortage and exacerbating already high prices for farmers.
Ken Seitz, interim chief executive of fertilizer giant Nutrien Ltd., said Tuesday that the invasion is disrupting the global supply of potash and nitrogen crop nutrients. The situation also leaves uncertainty about Russia’s ability to export, Mr. Seitz said.
Russia and Belarus are the second- and third-largest potash producing countries in the world. Russia was the top exporter of nitrogen in 2019, constituting 17% of global market share, and was the third-largest phosphate exporter, said Kenneth Zuckerberg, a senior economist at agricultural lender CoBank.
“Should U.S. cooperatives and ag retailers start increasing purchases now ahead of spring planting season on fear, fertilizer prices may continue to break higher into new record territory,” Mr. Zuckerberg said. The invasion’s pressure on natural-gas supplies and prices will push production costs of fertilizer even higher, he added.
Canada-based Nutrien said last month that it expects to sell 13.7 million to 14.3 million metric tons of potash this year, up from 13.6 million a year ago. The company could produce more if the global supply problems persist, Mr. Seitz said. However, Mr. Seitz said he’s concerned that if Belarusian and Russian suppliers return to the market, his company would be left holding excess fertilizer that the company can’t sell.
“That’s the line that we’re trying to walk this year,” he said.
A Nutrien spokeswoman said earlier last week that further violence in the region or sanctions could impact global trade flows and lead to diminished volumes of potash, nitrogen, and phosphates for the global market, at least in the short term. “We will continue to monitor the situation and do our part to ensure our customers get what they need,” she said.
High gas prices could lead to plant closures in Europe as they did in 2021, Mr. Seitz said, further constraining fertilizer supplies.
The share prices for fertilizer makers Nutrien, Mosaic Co. and CF Industries Holdings Inc. were all up more than 10% over the past week.
“Between the Ukraine-Russia conflict and Belarus sanctions, a lot of fertilizer supply is at risk, but it’s obviously a very dynamic situation,” said a Mosaic spokesman.