Prices spiked after U.S. fertilizer firm Mosaic Co. petitioned the U.S. Department of Commerce and U.S. International Trade Commission in June, saying that fertilizer imports from Morocco and Russia were unfairly subsidized. That prompted an investigation and raised the prospect of countervailing duties. The two countries are the largest sources of the commodity for the U.S. in the most recent crop year, through June.
The U.S. imported more than 2 million metric tons of phosphate fertilizers from Morocco last year, valued at $729.4 million, according to an International Trade Administration report citing U.S. Census Bureau figures. Imports from Russia totaled more than 767,000 metric tons and were worth $299.4 million.
Russia’s largest producer, PhosAgro PJSC, recently said it stopped shipping products to the U.S. due to the investigation and is rerouting those volumes to Canada, Brazil and Russia.
The value of U.S. purchases from the fertilizer import market fell 57% from the end May to the end of July, according to U.S. Census Bureau data, sending a supply shock through the industry and driving up domestic prices.
“Russian and Moroccan suppliers have slowed imports to the U.S., and that’s tightened up supply and also contributed to rising prices,” Alexis Maxwell, research director at Bloomberg’s Green Markets, said in a phone interview.
The import slowdown means Mosaic now holds more than 90% of the production market for phosphates in the U.S. -- increasing the influence of the Tampa, Florida-based company, she said.
There has been a great deal of rationalisation in the fertiliser and agricultural chemicals sector over the last decade. Heading into the peak in 2008 there were widely publicised fears that the world would run out of food and a lot of money was spent on increasing production. The end of the commodity bull market drove a process of rationalisation. It also encouraged major producers to flood the market with supply to drive out competition.
There is an increasingly likelihood that process has now run its course. Mosaic has rallied over the last few months to break its downtrend. It will need to hold the region of the trend mean on a pullback to confirm a return to medium-term demand dominance.
Nutrien firmed today from the region of the trend mean and the upper side of the underlying Type-1 with right had extension base formation.
Russia’s Acron remains in a consistent medium-term uptrend.
Australia’s Incitec Pivot is currently pulling back from the upper side of its base formation.
Bayer may have overreached in its purchase of Monsanto and its associated Roundup liabilities. The share pulled back very sharply this week following a profit warning and pessimistic guidance. It has now unwound all of the rebound from the March low and will need to demonstrate support soon to confirm support in this area.
Corn, soybean and wheat prices have firmed over the last couple of weeks. If they can sustain breakouts from what are lengthy base formations, that would act as a tailwind for fertiliser and seed companies.