Nutrien Ltd. CEO Ken Seitz expects farmers to begin rebuilding their stocks of fertilizers heading into the new year after running down inventories amid supply challenges, he said in an interview with Bloomberg. He said Nutrien is seeing prepaid sales of fertilizer about 15-20% higher than in 2020. He expects farmers who didn’t buy this year and have used all of their stored product to jump into the market and send prices higher again.
Fertilizer prices have fallen from the highest levels seen in years as farmers have postponed purchases to await lower prices, creating gluts that are upending the market for crop inputs. It is a reversal from earlier this year when prices surged after Russia’s invasion of Ukraine threw the world’s crop nutrient sector into disarray. Potash also saw price increases because of sanctions on Belarus.
Weather-related events in North America and some supply concerns in Brazil have seen farmers draw from existing stocks of crop nutrients, said Seitz. But he said agriculture fundamentals are strong as disruptions in the Black Sea region mean places like Canada, Australia, and Brazil will have to step up to fill the gap. “The world is going to have to look to the other breadbaskets of the world to fill that supply gap for food,” he said.
Now Brazil is just finishing its spring planting season, and North America is experiencing a strong fall application season. “Heading into the new year, we believe we’ll be in a period of re-stocking,” he said.
Seitz sees a worldwide shortage of agricultural inputs ahead as “export challenges” keep Russia and Belarus supplies from reaching global markets. “Russia and Belarus are just enormous producers of fertilizer. There are export challenges in the region. That’s certainly going to have a material impact on the markets.”
Belarus and Russia, two of the biggest producing nations of potash, ended up exporting less due to trade restrictions and war. Seitz sees shipments from Belarus in 2022 being at least half of those in 2021, after earlier expecting them to be down by one third to two thirds. The CEO estimates that Russia’s exports are down as much as 25%.
About 60% of new production that was expected to come into the market over the next five years was in Russia and Belarus, he said, adding that it’s unclear how much of that will come online.
Meanwhile, demand continues to rise as the world population grows. Nutrien plans to ramp up potash output capability to 18 million mt by 2025, a 40% increase compared to 2020. If the market changes, the company can reevaluate additional production, Seitz said.
“We believe 2023 is not a demand concerned world, but a supply concerned world,” Seitz said. “There’s not gonna be enough potash to go around.”
Seitz sees global shortfalls lingering well into next year. “For 2023, we really don’t see any reason why that would change,” he said. “As we watch the trade flows now – especially given where potash prices are at and have been – those producers are looking for every outlet that they can find, and they’ve now exhausted those outlets.”