Fertilizer Prices Rise To New North American High, Squeezing Crop Margins
A North American fertilizer price gauge has hit a new record, pushing up costs for farmers who already experience tight margins and threaten to make food even more expensive.
Green Markets’ North American Fertilizer Price Index rose 3% to $ 1,048 per short ton on Friday, surpassing the October high for the index which began in January 2002.
An energy squeeze in Europe is sparking the prices of natural gas, the main raw material for most nitrogen fertilizers, and coal use is declining in China. Fertilizer factories in Europe have been forced to shut down or reduce production. This drives up the international prices of crop nutrients.
The main producers of Nutrien Ltd. and Mosaic Co. expect prices to continue to climb, according to comments from executives in earnings calls this week. Fertilizer normally accounts for around 35% of the operating costs of a corn farmer. That number could rise to 45% in 2022, according to Bloomberg Green Markets.
Prices in the interior of the United States “have soared to over $ 1,000” per short ton in recent weeks, according to a Bloomberg Intelligence report.
Related: Historic Fertilizer Crisis Raises Prices For Every Plate Of Food
In the United States, some corn growers are seeing prices more than double what they paid last year. In Brazil, about a third of the country’s coffee growers do not have enough fertilizer. In Thailand, some rice farmers are asking the government to intervene in the spiraling market. With fertilizer markets now experiencing unprecedented supply shocks and record prices, this means even more food inflation around the world.