North American fertilizer prices are nearing a decade high this week as soaring commodity prices allow farmers to expand crop production, boosting demand for nutrients essential to producing food.
The fertilizer industry is experiencing supply-side constraints while demand is rising.
Rabobank's latest commodity note explained that farmers are expanding plantings and dispensing more fertilizer on fields to increase crop yields since ag prices have jumped due to money printing by the central bank, weather-related issues worldwide, and supply chain issues. The Dutch bank warns, higher prices will curb purchases of fertilizers.
"Matched against the furor of trade and geopolitics, fertilizer prices will near the equilibrium under which relative value creates demand destruction," analyst Matheus Almeida said.
Bloomberg lists several factors driving up the costs of fertilizer, include "elevated freight rates, increased tariffs, higher energy costs and supply constraints for nitrogen, potash, and phosphate."
It's unclear how long fertilizer prices will remain at 9-year highs, but increased farming costs will put upward pressure on food prices. So much for the "transitory" narrative the Federal Reserve and mainstream media continue to pedal.
In early March, we quoted Citi's commodity desk who expressed optimism in the agri space. At the time, they pointed out: "We remain positive on all Ag names, and our rank order is MOS, NTR, CF, CTVA, and FMC."