Market Morsel: Fert pricing pain

Market Morsel

Last week I wrote about the impact of Hurricane Ida on the export of grain in the US (See here). Whilst a lot of grain is exported from the US Gulf, a lot of fertilizer comes out of this region.

In Australia, most of our Urea comes from the Middle East and most DAP from China. However, as we all know, movements in markets in one part of the world generally flow through to other regions.

Hurricane Ida caused destruction to the supply chain of Urea and Dap, and we have seen very substantial increases in pricing levels. In A$ terms, DAP has increased from A$899 during the middle of August to A$970. At the same time, Urea has increased from A$468 to A$585.

It is important to note that these pricing levels do not include freight to Australia.

This is a huge rise and can be attributed to the impact on facilities and barge freight. The question is, how long will this be maintained?

The market is however not equal, with pricing in the US rising strongly, and pricing well above other origins. The spread between the US and other origins has risen sharply.

The high rise in pricing has not flowed through to pricing in the Middle East/China at anywhere near the same levels. This is according to the most recent data from CRU, it will be interesting to see if this flows through later on in the week.