New Orleans granular urea prices shot up as high as $705/st FOB after news broke of Russia’s invasion of Ukraine. The week-ago range had been $525-$545/st FOB.
Egyptian prices rose as high as $730/mt FOB from the week-ago $550-$555/mt FOB. Some other fertilizer prices rose as well, however, some remained in place as players opted to wait and see what would happen and others pulled price lists off the market.
U.S. Agriculture Secretary Tom Vilsack on Feb. 24 warned fertilizer companies and other farm suppliers against taking “unfair advantage” of the Ukraine conflict and said his department would be watching for unjustified price increases, according to Bloomberg.
He told reporters the USDA will make sure companies “don’t use this situation as an excuse for doing something that isn’t necessarily justified by supply and demand. That’s my biggest and deepest concern, and we’re obviously going to continue to keep an eye on that.”
Vilsack added that while it’s “too early” to assess the impact of the conflict on global agricultural markets, he doesn’t expect the crisis to add to food inflation for U.S. consumers.
In addition, Iowa’s Attorney General Miller is investigating high fertilizer prices and said he has the support of eight other state attorney generals, according to the Associated Press. He said he also had conversations with the leaders of the Iowa Soybean Association and Secretary Vilsack, who is a former Iowa governor, and sent letters to the top executives of five major global fertilizer companies. “I have this sinking feeling that we’re paying a price for allowing so few competitors in the ag area and in many other markets,” he said.
Product from the Black Sea appeared to be the major casualty, as those ports closed early in the conflict, halting exports. Indeed, vessels in the area reported damage from the conflict.
A chemical tanker, Millennial Spirit, was hit by a shell in neutral waters, with the crew abandoning ship after a fire broke out, according to Bloomberg, which also reported that Cargill Inc. confirmed that one of its chartered vessels was hit in Ukrainian waters and was sailing to Romania to make repairs. The crew was reported to be safe and accounted for.
While many major commodity prices spiked on Feb. 24, European gas dropped on Feb. 25 after it appeared that western sanctions would not cripple Russia’s ability to sell energy and other commodities.
Russia is a low-cost producer of nitrogen, phosphate, and potash. 2021 ammonia exports were put at 4.4 million mt, urea 7 million mt, DAP 1.3 million mt, and potash 11.8 million, according to Trade Data Monitor, which put major Ukraine exports at 370,000 mt for ammonia, 1.29 million mt urea, and 1.1 million mt UAN.
In UAN markets, Russia’s military incursion has triggered supply concerns in a market that is already tight. Belarus UAN exports are already out of the market due to sanctions.
Russia exported 1.8 million mt of UAN last year, but Russian producers – EuroChem AG and Acron Group – have fewer outlets for their product, as E.U. and possible U.S. duties restrict trade. Three-quarters of Russia’s UAN exports now go to the U.S. France’s imports of Russian UAN have declined since 2019, when the E.U. levied anti-dumping duties on Russia of €42.47 per mt.
Russia is the world’s second-largest exporter of potash. With global potash markets already rocked by Belarus product effectively out of the market, and with already soaring global potash prices, (GM Feb. 18, p. 1), any sanctions implemented on Russian exports of potash, and an absence of the supplier from the market – partial or completely – would likely be immediately felt, causing global potash price rises to accelerate still further.
By Friday morning, Russia’s Vladimir Putin was reportedly open to sending a delegation to Minsk for talks with Ukraine, according to a Bloomberg report. Earlier, China’s leader Xi Jinping told Putin that Moscow should negotiate with the government in Kyiv.
Moscow-led forces continued attacks on military and civilian targets on the second day of their invasion after the U.S. and its allies imposed new sanctions on Moscow, and U.S. President Joe Biden warned of “a dangerous moment for all of Europe.”
European Union leaders backed a broad sanctions package late Thursday that they said will limit Russia’s access to Europe’s financial sector and restrict key technologies. Leaders from the North Atlantic Treaty Organization will hold virtual talks on the alliance’s next steps starting at 3 p.m. in Brussels on Feb. 25.
President Volodymyr Zelenskiy said Ukraine’s military had so far prevented Russia from achieving its objectives. “Russia will have to talk to us sooner or later, talk about how to end the fighting and stop this invasion,” Zelenskiy said in a morning address. “The sooner this conversation begins, the smaller the losses to Russia itself.”