Farmer Fertilizer Focus - Phosphates

By: Josh Linville, Vice President- Fertilizer

Sat, 01 Jan 2022, 19:31

Add us as preferred source on Google

PHOSPHATES

Josh Linville

Director - Fertilizer

josh.linville@stonex.com

What everyone wants to know first, what do we think will happen going forward

A long explanation short, I am still leaning toward phosphate values being steady to bullish.

Short explanation long, I think emotion will dictate market movements in the next 30 days and then fundamentals will take over.

Today, the fundamentals say that global supplies are down while global demand is up.

China continues to ban exports - as one of the world's largest producers/exporters, losing them is a big deal. They continue to say that they will keep the export ban in place thru June '22. Could they change their minds tomorrow? You better believe it but so far, there are no indications of that happening.
Some regions are much lower on phosphate supplies than normal - this has been seen/heard more in the India/Pakistan region, though others have also been rumored. Like anywhere, if you do not have the product, it is very difficult to grow the crop. Eventually, this will force importers to step forward and find the product almost regardless the cost.

While the global S&D continues to look bullish, North American values have been slipping due to emotion.

Bigger push on Washington D.C. to do away with duty rates against Morocco and Russia - I'm surprised it took everyone this long to come to the party but hey, better late than never. Retailers/traders are nervous that if requests to do away with the duties are successful, that prices will plummet. That is the emotional response. Fundamentally, NOLA values are well below global values and it shouldn't make any difference.
Fear that spring demand will suck - sorry, couldn't come up with a better description than suck!!! A lot of the industry was around in 2008. They remember doing really well on the way up, just to give it all back on the way down. That means they will be looking for any red flags to dump their positions.

I wouldn't be surprised to see a little (not a lot) of price pressure thru January but remember that spring is not that far away for preplant applications. If too much of the market (locally or globally) waits until it is too late, we could see prices start jumping. Just in time demand typically begets just in time logistics...and those are not cheap.

What has happened in the last 30 days?

Chinese government continues to restrict exports

There has been no change to this story, unfortunately. The below paragraphs are directly from the November newsletter. I have left it here for those that may be new. It gives a good explanation for what is happening.

China is no different from any other country in the world. As global phosphate prices have rallied, so too has Chinese values. The difference is that China is a communist government and will take steps to restrict "free market" movements if they believe it is in the best interest of their people.

Due to that, the Chinese government has stopped the flow of fertilizer from inland production points to ocean ports that would normally be used to export product around the world. The problem is that China is a MAJOR producer of phosphate. The are approximately 39% of world operating capacity as well well as 32% of global phosphate trade (4.6MMT per year). Doesn't matter what market you work in, if you lose a third of available product, it is going to hurt.

So now we need to fear the falling domino's. Countries that normally rely on China for their product will be forced elsewhere. When the next area's demand steps forward, they will find product is tight because it has already been purchased and then will be forced elsewhere. Then the pain comes....

India MAP purchase from Morocco sets the new high bar

Last month, it was Pakistan's purchase from Morocco that set the global price high bar. December saw India step back in and reclaim the title.

In yet another example of how tightly supplied this region is, India purchased 55KMT of MAP from Morocco at a price of $963 cfr. That is a really big value that the rest of the world should be paying attention to. Does one trade set the entire market? No, but it certainly gives the producer something to aim for.

NOLA is crazy cheap vs Morocco's sale to India

The focus in North America has been on what the government will do regarding the duties against Morocco/Russia as well as demand expectations.

What it does not seem to be doing is paying any attention to global values.

Take that above Indian purchase for example.

$963 CFR India equates to around $910 - $915 Morocco.

$910 Morocco equates roughly to $860 NOLA loaded barge.

Today, NOLA MAP is valued around $725. That makes it approximately $140 CHEAPER than Moroccan replacement.

North America does not need Moroccan imports to meet spring demand. However, at that sort of price differential, North American phosphate could be exported and be VERY competitive with global producers. I doubt this happens because no one wants to be known as the one doing it but that is how low priced NOLA is.

Where are current values in relation to the past

For DAP, we use NOLA/New Orleans Louisiana as our base point as it is the easiest spot to track.

Vs 30 days ago - -3% or approximately $21 lower
Vs 90 days ago - +5% or approximately $35 higher
Vs 6 months ago - +19% or approximately $118 higher
Vs 1 year ago - +85% or approximately $333 higher

Bull/Bear Factors

Because no market is ever guaranteed to go higher/lower, we try to consider the factors that can sway values so that we are able to act when they occur rather than react.

Bullish Factors

China continues to restrict exports – as long as they remain out of the world market, supplies will suffer. As long as supplies suffer, so to will prices.
Big fall run means low inventory levels – across wide swaths of North America, this fall was about as good as it gets, meaning everyone that wanted to apply got to apply. This likely means that we will enter the short winter period very low on inventories. That is a huge win for producers who know that it helps their negotiation power. Have you ever met a producer that when given the choice wanted prices lower?
Global inventories still low/demand high – we have been talking the last month or two regarding countries like India/Pakistan/etc. being extremely low on inventories. That means that to catch up, their purchase volumes need to be higher than normal. Australia demand is just around the corn with their application season starting in February. It seems there is going to be a lot of global mouths to feed...and not much food at the table.

Bearish Factors

China can change VERY quickly – is this likely? No. Could it happen? It's 2021, of course it could. If we go from believing there will be no Chinese exports thru June '22 as they have said to getting major exports in a matter of weeks, the market will likely change very quickly.
Corn prices could fall – right now, we are enjoying watching Dec '22 corn values rise as that means good things for farmers going forward. However, this can just as quickly turn around and start to plummet. If values did drop, farmers would be forced to cut back on expenses and phosphate would be squarely in the crosshairs.
U.S. government stops import duties - from a strict price comparison POV, there is no reason doing away with the duties would make any impact on NOLA phosphate values. NOLA is just too cheap to call on imports. However, do not think for a minute that Morocco and Russia wouldn't look for payback. Even if it is a big discount, if the duty is shut down, they may bring tons to the U.S. just out of spite. Better believe that would catch the attention of the market.

Where are the current phosphate/grain ratio values today?

We believe that only looking at the flat price of either grains or fertilizer can be misleading:

Only selling grain can hurt you if fertilizer prices rise substantially
Only buying fertilizer can hurt you if grain prices fall

We look at the ratio "value" to get a better indication of where we are or how many bushels of X does it take to pay for 1 ton of fertilizer.

Would you rather:

Spend 120 bushels to pay for 1 ton of DAP
Spend 80 bushels to pay for 1 ton of DAP

When we compare the current ratio value against recent years, we start to see if we are high or low.

YOUR VALUES WILL LOOK DIFFERENT

This graph looks at the NOLA DAP price vs the flat grain price. There are no logistics on either product. Your location will look different due to fertilizer logistical costs, grain basis, etc.

Josh Linville’s Thoughts

Remember that just because NOLA values drop, that does not mean inland values will drop. Many times, retailers do not push their price higher when replacement jumps. I've seen it time and again throughout my career.
If you are going to wait until just before preplant application to make your purchases, I implore you to talk to your supplier now. If enough of the market takes this stance, the replacement market may not be ready. If you are uncomfortable purchasing phosphate today for your needs, imagine your retailer who has to purchase thousands of tons. The more communication this year, the better.
Continue to make level headed decisions. If you are going to cut your phosphate application rate, make sure it does not cut your yield potential by even more. This is a numbers game.

Fertilizers

This material should be construed as the solicitation of an account, order, and/or services and represents the opinions and viewpoints of the individual authors or presenters. It does not constitute an individualized recommendation or take into account the particular trading objectives, financial situations, or needs of individual customers.

The views are current only through the date stated and are subject to change at any time based upon market or other conditions, and StoneX Group Inc. (“SGI”) disclaims any responsibility to update such views. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. Past performance does not guarantee future results.

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided.

References to certain OTC products or swaps are made on behalf of StoneX Markets, LLC (SXM), a member of the National Futures Association (NFA) and provisionally registered with the U.S. Commodity Futures Trading Commission (CFTC) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ and who have been accepted as customers of SXM.

StoneX Financial Inc. (SFI) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (SEC) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Advisor. StoneX Financial (Canada) Inc. (SFCI) is registered in Canada and is a member of CIRO and CIPF. References to certain securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to certain exchange-traded futures and options are made on behalf of the FCM Division of SFI. Wealth Management is offered through SA Stone Wealth Management Inc., member FINRA/SIPC, and SA Stone Investment Advisors Inc., an SEC-registered investment advisor, both wholly owned subsidiaries of SGI.

R.J. O’Brien & Associates, LLC (RJO) is registered with the CFTC as a Futures Commission Merchant and is a member of NFA.

StoneX Financial Ltd (SFL) is registered in England and Wales, company no. 5616586. SFL is authorized and regulated by the Financial Conduct Authority (FCA) (registration number FRN:446717) to provide services to professional and eligible customers including: arrangement, execution and, where required, clearing derivative transactions in exchange traded futures and options. SFL is also authorized to engage in the arrangement and execution of transactions in certain OTC products, certain securities trading, precious metals trading and payment services to eligible customers. SFL is authorized and regulated by the FCA under the Payment Services Regulations 2017 for the provision of payment services. SFL is a category 1 ring-dealing member of the London Metal Exchange. In addition SFL also engages in other physically delivered commodities business and other general business activities which are unregulated and not required to be authorized by the FCA.

This communication is issued in the European Economic Area by StoneX Financial Europe GmbH (SFEG). StoneX is the trade name used by STONEX GROUP INC. and all its associated entities and subsidiaries. StoneX Financial Europe GmbH (“SFEG”) is a securities trading firm registered in Germany under Company No. HRB 80844.

StoneX Financial Pte Ltd (Co. Reg. No 201130598R) (“SFP”) is regulated by the Monetary Authority of Singapore and is a Capital Markets Service Licence holder (for dealing in capital market products), an Exempt Financial Adviser (for advising on investment products and issuing or promulgating analyses/ reports on investment products) and a Major Payment Institution (for domestic and cross-border money transfer services).

SFP may distribute analysis/report produced by its respective foreign affiliates within the StoneX Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations Recipients should contact SFP at (65) 6309 1000 for any matters arising from, or in connection with, this webinar.

StoneX APAC Pte. Ltd. (“SAP”) (Co. Reg. No 200616676W) is regulated as a Dealer (PS20190001002) under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of anti-money laundering and countering the financing of terrorism.

StoneX Financial (HK) Limited (CE No.: BCQ152) (“SHK”) is regulated by the Hong Kong Securities and Futures Commission for Dealing in Securities and Dealing in Futures Contracts.

StoneX Financial Pty Ltd (ACN 141 774 727) holds an Australian Financial Service License (AFSL: 345646) for Dealing in Securities, Exchange-Traded Derivatives Contracts, OTC Derivatives Contracts and Foreign Exchange Contracts, and is regulated by the Australian Securities and Investments Commission.

StoneX Securities Co., Ltd. (“SSJ”) (Co. Reg. No 010401047199) is regulated by the Japanese Financial Services Agency as a Type-I Financial Instruments Business Operator (Kanto Local Finance Bureau (FIBO)No.291’), is a member of the Financial Futures Association of Japan for dealing and broking FX and FX Option transactions, and is a member of the Japan Securities Dealers Association for dealing and broking stock indices and option transactions.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. Past performance of any futures or option is not indicative of future success. Indicators are not a trading system and are not published as a specific trade recommendation. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

The report/analysis herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

Satellite view of Earth at night showing illuminated cities across Asia and the Middle East

Discover more insights

Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.

Explore subscriptions

Fertilizer's Spring Reckoning Now Runs Through the Strait of Hormuz

A cluster of positives has finally tilted the fertilizer market toward buyers, from China's return to normal urea exports to fresh Moroccan phosphate cargoes bound for the U.S. Yet the whole picture still hinges on one waterway, and a prolonged standoff around the Strait of Hormuz could unwind those gains before spring.

Editorial TeamTue, 04 Aug 2026, 18:36

Fertilizers

Fertilizer’s Hidden Chokepoints Stretch from Hormuz to the Nord Stream

Fertilizer supply now depends on a handful of contested shipping lanes and pipelines stretching from the Middle East to Northern Europe. Here is how the Strait of Hormuz, the Red Sea, Russia’s shadow fleet and the Nord Stream pipeline are reshaping where nitrogen, phosphate and potash actually move.

Editorial TeamThu, 30 Jul 2026, 05:47

Fertilizers

The PM Commstock Report

Afternoon Market Review Includes - The cattle industry enters a critical year, with markets facing seasonal pressures, climate impacts, and the echoes of historical trends.

Commstock InvestmentsFri, 24 Jul 2026, 19:38

Grains & Oilseeds
Energy
Renewable Fuels
Cocoa
Coffee
Cotton
Fertilizers
Meats & Livestock
Currencies

StoneX: We open markets

Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.

Reach

With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bi-lateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.

Transparency

As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve; our financials and record of accomplishment are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.

Expertise

From our proprietary Market Intelligence platform, to “boots on the ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.