how north africa could worsen the food crisis

How The Crisis In North Africa Could Make The Global Food Situation Even Worse
Joe Weisenthal | Feb. 2, 2011, 8:16 PM

Surging wheat prices are certainly one (though not the only) cause of rioting upheaval in Tunisia, Egypt, and elsewhere.

And guess what. If things get worse, that could feed back into the food problem.

That's because this region is a major source of diammonium phosphate, which is a major ingredient for growing... wheat.

Citi's Hugh Dive hits on four key points:

Political Unrest could impact Fertilizer Exports North Africa and the Middle East are a major source of globally-traded phosphates. In light of the ongoing political unrest across Tunisia (Jasmine Revolution), Algeria, Egypt and Jordan, in this note we indentify the key phosphate fertilizers exposures across the region, to assess the potential impact of supply disruptions.

Why are North Africa and the Middle East Important to Western Farmers? Aside from producing 25% of globally traded DAP (diammonium phosphate), North Africa and Middle East
dominate the global phosphoric acid and phosphate rock markets, key inputs in ammonium phosphate production. Supply disruptions in these markets would put further pressure on the marginal non-integrated producers, thus pushing up global DAP prices.

North Africa North Africa accounts for 57% of globally traded phosphoric acid, 46% of traded phosphate rock and 21% of traded DAP. Morocco remains the key phosphate fertilizer exposure followed by Tunisia, Egypt and Algeria.

Middle East The destabilizing effect of the riots in North Africa has flowed into the neighboring Middle East, which supplies 31% of traded phosphate rock, 11% of traded TSP and 4% of traded DAP. Key exposures in the Middle East include Jordan and Syria which account for 18% and 12% of globally traded phosphate rock.

The good news. It's going to take a lot more than we've seen to get serious supply disruption. Dive also figures that serious disruption would be good for the big fertilizer players, like Mosaic, which would see even more pricing power.



Read more: http://www.businessinsider.com/north-african-crisis-impact-on-phosphates-2011-2#ixzz1CrOIEZ8O