General discussion, page-1037

Demand destruction is likely to hurt phosphate prices this year.

As a farmer I can tell you cattle prices have plummeted recently, most graziers are heavily in debt and face a combination of increasing interest rates, plummeting cattle prices and now half the country is flooding while the other half has dried out too much. I see similar problems in Asia and America.

I am still optimistic for Ardmore, any government worth thier salt would throw funding at the project. CXM should be ok but markets won't care. Long term will be better.

Also big unknown is China resuming exports.

Article I found:

P USE DECLINES IN '22

IFA reported all global fertilizer use is set to drop by 1.6% to 200.6 mmt globally in 2021 after increasing by 6% to 203.8 mmt in 2020. The decline can be blamed on more expensive fertilizer and the war in Ukraine.

There could be a noticeable decline in P consumption in 2022, according to IFA. Global P consumption is forecasted to decrease by between 0% and 7% in 2022.

Global fertilizer use is forecast to fall in 2022 but see a partial recovery in 2023. The adjusted P fertilizer capacity should increase anywhere from 1% to 3% in 2023, IFA reported.

IFA forecasts world fertilizer consumption to be in the range of 186.8 mmt to 200.1 mmt for 2022 in the three scenarios. The numbers are forecasted to tick up slightly for 2023, ranging from 189 mmt to 204 mmt.

In the medium term (2024 to 2026), global fertilizer demand is expected to continue in its demand recovery. Total global fertilizer demand is expected to range from 194.6 mmt to 211.1 mmt in 2026.

Global P consumption would lag somewhat behind in the pessimistic scenario and remain below the 2020 levels by the end of the outlook period. However, under the middle and optimistic scenarios, global P consumption would grow more quickly and exceed 2020 by 2026.

WATCH BRAZIL

Taylor said what is going on with fertilizer right now in Brazil could be a leading indicator of what the rest of the world might see with fertilizer supply and prices in 2023.

Brazil, which imports nearly all of its nutrient needs, currently has excessive inventories of P fertilizer. Prices for P fertilizer have dropped 20% to 30% because of the high inventories in the South American country, he said.

"This fertilizer can be re-exported to places like Southeast Asia but it shows there is no shortage of phosphorus fertilizer in the world," Taylor said.

Phosphorus import exposure is varied around the world with Latin America and East Asia more exposed to imports. Other locations such as North America and North Africa produce most of their P fertilizer domestically.

While demand might be down some in 2022, this trend will most likely change in the coming years.

Lawson said P demand will probably be fairly steady for 2023; it will be most likely higher looking forward to 2024. It really depends on the affordability of the nutrient, he said.

FUTURE OF CHINESE P EXPORTS

Another wild card to the P outlook in 2023 is if or when China reenters the P export market. China was one of the world's largest P exporters at one time, supplying about 30% of the total world trade.

When fertilizer prices skyrocketed in 2021, the Chinese government decided to ensure there was an adequate domestic supply of P fertilizer for its own farmers by eliminating exports. The initial thought was China would return to the market in mid-2022 but this situation did not occur ().

China recently introduced a quota system for the second half of 2022, hoping to keep domestic P prices lower, Lawson said. Chinese P manufacturers have considerably lowered their operating rates; these lower rates don't appear to be changing anytime soon, Lawson said.

"The cutting of exports did lead to lower domestic phosphorus prices in China," he said.

The big question remains if China ever reenters the global P export market.

Linville believes they will not. While it is often difficult to know what exactly happens in the Communist country, all signs point to the nation being self-sufficient in P fertilizer production, he said.

This situation does fundamentally change the global P market since a major world supplier no longer exists. Many nations, such as countries in Asia and Australia, will now have to find a new supplier.

Linville said it remains to be seen what effect this change has on the longer-term global P market.

"We just really don't know for sure yet," he said.

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Editor's Note: This is the second of three stories in DTN's special Global Fertilizer Outlook series.

To see Global Fertilizer Outlook - 1, go to: