Farmer Fertilizer Focus - Phosphates

By: Josh Linville, Vice President- Fertilizer

Sat, 29 Jan 2022, 20:52

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

I'm going to break this into 2 pieces:

Global phosphate market

As long as India continues to buy like they have, it appears that prices will continue to hold. They are soaking up a lot of product at a very high price. However, once that demand goes away, we are likely to see values start dropping. I'm not seeing much that tells me that other demand points are willing to pay anything close to those values. Not to say that they will not, just not today.

Long answer short: lot more downside at current prices than there is upside but if you wait too long, you may not be able to get product in time for application. Weigh the pro's and con's.

North American phosphate market

While global values have been rising and holding, NOLA has actually dropped. Why and how?

In my opinion, the answer is easy...fear.

There has been a tremendous amount of pressure being placed on the current duties against Russia/Morocco import product. Grain associations are screaming about it. Retail organizations are screaming about it. We actually have politicians that have been screaming about it. They have mid-terms coming up so they are finally on board!!!

While this is going on, NOLA DAP prices are low enough that product could be exported to places like India and a solid coupon clipped but it isn't happening. My interpretation is that if you do, you had better set a chunk of that profit to the side to pay for lawyers to sit next to you and advise you when everyone shines the angry spotlight on you. If I were a trader, I would let that opportunity pass.

Long answer short: with NOLA a discount to the world, spring demand just around the corner and improving corn values will cause phosphate values to rise. I'm not expecting anything major like we have seen in urea but I think the trend will be more bullish.

What has happened in the last 30 days?

Chinese exports are still mostly a standstill

Sorry to beat a dead horse month after month but this is too important on the world stage to skip.

China is by far the biggest producer of phosphate in the world and also the biggest exporter to the world...when they export.

The Chinese government originally said that they would maintain the export ban thru June '22. Whether they continue this approach to June or discontinue it earlier has been the subject of conversation for a lot of the industry. Anyone that has worked with China knows that they can change suddenly.

As long as the export ban remains in place, global supplies are tight. However, once the ban is lifted, the POV of the market will be toward bearishness. Position holders will get more aggressive on pricing to capture all the sales they can. Demand will likely step back in anticipation of lower prices. This could cause producers/suppliers to continue dropping prices to find demand. It can be a violent drain.

India continues to set the price for the world

It seems that India has finally found a DAP value that allows them to find product to purchase and that value has been in the $920 - $930 USD delivered range. This is fantastic news for Indian farmers who have been nervous about perceived low inventory levels.

For the rest of the world, this means that phosphate producers are pointing to this price as their current price idea. If they do not want to buy at the same price, they will just ship more to India.

Eventually, India will secure what it needs and will start to disappear from discussions. This will likely lead to prices starting to soften but when that happens is anyone's guess.

North America continues to be cheap vs the world

I talked about this last month but given its importance, we are going to discuss again.

India has continued to buy DAP at a price of $920 - $930MT USD. For those of you in the U.S., this equates to $834st USD. The current NOLA DAP market is $690st USD. The question I have been getting asked is: why are we not seeing exports at a $150 differential?

My guess: fear.

As discussed above, if you start exporting phosphate from the U.S., you will become public enemy number one in the U.S. / N.A. marketplace. If I were a trader and I saw this opportunity, I would gladly walk away from it. Sure, I could make a pile of money on the trade but the blowback would be intense. There are some fights I'm not willing to take on and this would be one.

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 - -5% or approximately $35 lower
Vs 90 days ago - +3% or approximately $17 higher
Vs 6 months ago - +14% or approximately $84 higher
Vs 1 year ago - +31% or approximately $165 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 – I know I continue to recycle this and I swear it isn't due to laziness!!!! China, when they are exporting, account for around 1/3rd of the global DAP/MAP export total. You cannot cut off 1/3rd of the global export trade and not have it tighten supplies/push prices higher. The government continues to hold to their original strategy of maintaining this approach thru June '22.
Escalating tensions regarding Russia – if they decide to invade, the global phosphate market will need to take notice as Russia accounts for roughly 12% of the global export trade of DAP/MAP. More important than if they invade will be how the world reacts if they do. If the decision is to completely cut them off from the world, then that is a huge cut to available supplies. If only part of the world sanctions them, tons will still find a way to ship but those countries that sanction will pay a higher price.
Global inventories still low/demand high – India continues to appear to have an appetite for phosphate with their continued purchasing at extremely high values ($920 - $930 USD delivered). If they continue buying at these prices, it sets the price bar for most of the world. For buyers in places like Australia whose phosphate application is about to begin, it means they have to meet those high values or run the risk of not having enough supply.

Bearish Factors

China could start exporting tomorrow... – there is nothing to signify this is going to happen. In fact, some conversations I have had indicate that they are actively shutting down the hope that it will happen in country. However, we know how quickly things can change. If (big if) the Chinese governments call off the export block, the world phosphate market will lean bearish immediately for fear of the supply that is coming.
Grain prices could fall – there are a lot of acres around the world that are struggling with profitability due to high inputs values and tough weather conditions. For those on the fence, cutting phosphate application rates is usually the first step in getting back to profitable. If grain prices fall, this will occur very quickly and the supply side of the phosphate market will take note very quickly.
India demand goes away - right now, the India's constant buying at world high values continues to support the global phosphate market. What would happen if they went quiet? I would guess prices would start to fall as producers started to chase any demand that remained. For the moment, it does not appear that this is going to happen but we do not know and need to continue watching.

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

For many farmers around the world, the temptation is going to be there to cut their application rates of phosphate in order to save money. Let me be crystal clear: I AM NOT HERE TO TELL YOU THAT IS RIGHT OR WRONG. If you cut your application rate by $5/acre, you will save that $5/acre. If that cut reduces your yield by 5 bushels of corn/acre, you have lost. With corn at $5.50/bushel, that far outweighs what you saved. What I will say/ask is that you look at the whole picture and make the best logical decision for you/your organization. Talk to your coop/retailer/etc. Talk to your agronomist. Get advice wherever you can. In the end, make the best decision for YOU.
If you decide you want to wait before buying your phosphate for application, PLEASE talk with your supplier. A lot of farmers are worried about buying and then seeing the price drop. I get that. I really do. You need to know that your retailer/coop is the exact same way. The temptation is there to not buy product until demand shows up. With logistics worse off than usual, if you show up last minute, it may take a while to get there and be a lot more expensive. This is not an attempt to scare you into buying. I am only saying you should be talking with your supplier so they know what to expect and can develop a game plan to do as well as they can.

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.