Fertilizer prices are continuing to rise to new highs as a result of Russia's invasion of Ukraine, which threatens a large amount of the world's fertilizer supply, raising concerns about rising global food inflation.
The price of nitrogen fertilizer ammonia soared 43 percent to $1,625 a metric ton in Tampa on Friday, setting a new high for the 29-year-old index. According to Bloomberg Intelligence, production interruptions and tight global supplies are driving the increase. The war is driving up the cost of natural gas, which is the primary ingredient in most nitrogen fertilizers, causing some European companies to reduce output.
Markets are also concerned that possible sanctions on Russia, which is a key low-cost exporter of virtually every major crop nutrient, might disrupt global commerce. According to Trade Data Monitor and Bloomberg's Green Markets, the country accounted for over a fifth of fertilizer exports in 2021. Russia has encouraged domestic fertilizer companies to cut back on exports, fueling fears of a supply deficit.
At the same time, prices for key crops such as wheat, corn, and soybeans are skyrocketing, and a war in one of the world's breadbaskets threatens to feed millions more people. Increasing agriculture input expenses, such as fertilizer, might push food prices further higher.
