Russia Imposes Fertilizer Export Quotas to Control Inflation

Russia announced plans to impose export quotas on nitrogen fertilizers to ensure domestic supplies and contain price inflation. The move could further support surging fertilizer prices worldwide and tighten global fertilizer markets already searching for supply.

Russia’s announcement is the country’s latest effort to keep domestic agricultural prices in check, after taxes on wheat exports were introduced earlier this year. 

Russia plans to impose a six-month quota on various fertilizer exports. Nitrogen fertilizer exports will be limited to 5.9 million tonnes and shipments of complex fertilizers containing nitrogen to 5.35 million tonnes. The measures will begin in December.

This Gro Display details Russia’s fertilizer export quantities and destinations. The biggest customers for Russia’s nitrogen fertilizers are the US and Brazil.  

Russia’s export quotas come on the heels of fertilizer export bans already imposed by China along with US duties set on Russian and Trinidad and Tobago urea ammonia nitrate (UAN). Turkey, a large fertilizer exporter, has also stopped shipments.

These hurdles as well as global fertilizer production issues continue to upend traditional trade flows and will likely keep fertilizer prices elevated through the first half of 2022. Since the end of June, urea cash prices are up 60%-70% in the US Midwest, and DAP futures prices are up 20%-25%. 

China, the world’s largest producer of phosphate, a key component in fertilizer, has banned phosphate exports until at least June of next year. Few of its supplies are exported to the US. But amid geopolitical discord among the US, Russia, and Trinidad and Tobago (as Gro wrote about here), the global customers that combined purchase 30% of China’s phosphate are now direct competitors with the US for what declining phosphate supplies remain available. The biggest buyers of China’s fertilizers include India, Pakistan and countries in Southeast Asia.

Farmers around the world are talking about switching their crops from cereals such as corn, wheat, and barley, which require fertilizer containing high levels of nitrogen, to soybeans and pulses, which require less. But this isn’t only about grains, it will also impact the crops used to feed cattle and other livestock, too. 

Virtually all crop inputs have doubled in price from last year’s lows as a rapid global expansion and supply chain bottlenecks have outpaced fertilizer market expansion and quickly used up much of the available input supply on the world market.

A massive global acreage expansion has eaten up any excess fertilizer supplies and production has not been able to keep up. China, the world’s largest agricultural producer, plans to increase production of corn, wheat, and soybeans this year, for example, while Brazil is expected to plant a record amount of corn. 

Another driver of the recent surge in fertilizer prices has been the global energy crunch. Natural gas futures are up 87% this year, trading at levels not seen in years. Natural gas is the primary fuel source for fertilizer plants across the world, and it is a key ingredient in anhydrous ammonia production, so its rally amid dwindling global energy reserves is having noticeable impacts.