Farmer Fertilizer Focus - Potash

By: Josh Linville, Vice President- Fertilizer

Tue, 30 Aug 2022, 23:22

Add us as preferred source on Google

September '22 POTASH

Josh Linville

Vice President - Fertilizer

josh.linville@stonex.com

NOLA potash price graph

Please remember that this is looking at the cost of one short ton of potash sitting in a barge at NOLA (New Orleans, Louisiana). Your cost is not going to be the same. This should be looked at more in regards to the price direction rather than the actual pricing.

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

For some reason, I thought I had said in the August edition that I thought potash prices would start to rebound. Imagine my relief when I reread it and realized that I said I thought "hold steady to slightly lower". Prices have dropped in the gulf approximately $75 over the last month so I would hardly call it a win in saying steady/slightly lower...but moral victories!!!!

Little has changed in the days since the August newsletter. The potash world remains relatively unchanged with the focus on very few factors:

Lithuania not allowing Belarus exports
Demand concerns around the 2023 fertilizer year

Really, that is about it from my POV. That said:

I continue to struggle seeing potash finding its pricing footing (bearish). However, I have to admit that the calendar is getting tighter by the day in respect to fall application season. When I hit send on this, there will be almost exactly 2 months until November 1. Crops are turning, you are getting ready for harvest and purchase decisions need to be made. The farmgate may decide to wait until winter/spring but there will be a fall run. If that demand surge is big enough, we could see higher numbers by the time I send the October newsletter...I'm just not thinking so today.

Should you lock in fall '22/spring '23 potash needs today?

This has to come down to each farm organization but PLEASE realize IT IS ONLY 60 DAYS UNTIL NOVEMBER. Kudos to you if you know me well enough to know that I just recounted the months a dozen times to make sure that number was right!!!

There isn't much in the way of bullish news for potash in the near term. Demand seems sluggish. Producers continue to produce. Potash prices still have not come off like other fertilizer prices have from their high's.

That said, do not expect your retailer to be waiting with bated breath for you to arrive to their office. They are looking at the same market and do not want to be hung with high priced inventories.

That covers fall. Spring is easy, hard to pull the trigger today given the price trend and so much time before spring. But also keep in mind that if enough fall demand delays, it could mean a much bigger spring season that we could struggle with.

What has happened in the last 30 days?

Lithuania continues to block Belarus potash shipments... (unchanged from August)

...thus, the world is losing approximately 20% of its normal potash exports per year.

I know for those of you that have been on this newsletter for a while, you have heard this story over and over and over again. I'm sorry but if it were not so important, I would not continue including it. It is, so I will.

Originally, we thought that both Russian and Belarus potash exports would grind to a halt. Many nations around the world talked a big game of completely cutting off business with both countries as a result of their part in invading Ukraine.

Well, somewhere between the news podium and their desk, someone pulled those politicians to the side and reminded them that their people need food. Hence Russia exports slowing slightly but not nearly to the extent we originally expected. This was a win for those needing product and desiring lower prices.

Unfortunately for Belarus, it isn't that simple. Russia still has access to the world thru her deep sea ports. Belarus is completely land locked. To its south is Ukraine. Well, they are not going to ship their product thru a war zone and thru "enemy" territory. To their north is Lithuania who, as a result of Belarus helping Russia, has completely blocked shipments thru and out their ports. Logistical options to the east and west are limited and cannot handle their normal flows.

The simple result is that Belarus exports have ground to a halt.

One day, these shipments will return. Whether that be thru a new avenue thru Russia or thru Lithuania, these tons will return. Unfortunately, trying to figure out the day is proving...complicated. All we know is that today is not that day.

New production help is on the way (unchanged from August)

High prices cure high prices. Sometimes that is due to demand lowering. Sometimes it is due to new supplies coming online. Sometimes, it is a combination of the 2.

Luckily, we are starting to hear of a lot more production expansions being announced around the world. There are several in Canada that should be coming sooner than later. There are a few in Russia that should start churning out product in the coming months/years. We even have to assume that Belarus will return sometime soon, though which logistical avenue will be used remains a question.

What I am saying is that more supply is on its way with the very real possibility that supplies will be plentiful. If that makes you smile in the thought that it will mean lower pricing, you are right!

I'm not confident this will have a massive effect between now and Q4 '22. By Q2 '23, we could see prices softer (especially if this fall is a bust). Beyond that, hopefully we will finally see some much needed help on lower prices.

What will fall (Q4 '22) demand look like? (unchanged from August)

This is a tough call because it is hard to tell what millions of farmers around the world will do with prices where they are.

I've heard from a lot of farmers in the last couple months and their answers could be more different if they tried!

While I think the price of potash is too darn high, I can sell next years crop/buy potash and still lock in a profit so that is what I'm doing today.
I'm afraid supply will not be there when I need it so I'm stepping forward now.
I will put on normal application rates but I'm not buying anything until my butt leaves the combine seat.
I've got adequate potash levels in the soil. I can cut back rates and not harm overall yield potential.

That would be the short list but you get the idea.

Today, we are assuming that we will see application rates down 10 - 15% between the fall and spring seasons. That alone is a big cut. The harder call is telling how much fall demand will be there. If it turns into another poor season where we do not move inventories, that means we lead into winter with full sheds and nowhere for winter produced potash to go. That could weigh on prices.

We will get this answer but there will be snow on the ground by the time we do.

Where are current values in relation to the past

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

Vs 30 days ago - -11% or approximately $75 lower
Vs 90 days ago - -18% or approximately $140 lower
Vs 6 months ago - -12% or approximately $85 lower
Vs 1 year ago - +8% or approximately $49 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

Belarus remains cut off from the world – same message June/July/August...why spoil the consistency!!!!: yes, we expect that global application rates of potash will be down due to the high cost. However, we do not think that demand loss will outweigh the loss of Belarusian exports which account for 7M tons/year or approximately 20% of the global export marketplace. With them gone, the world is simply tight.
Strong export options - another factor, another month repeat...this is getting ridiculous: with Belarus gone, their normal buyers are out looking for new suppliers. It is not as though they will throw their hands in the air and give up. No, they will look for the next best options. Those options (like Canada) know they have more options and will use that to their higher priced benefit.
Strong '23 demand – next time you see me in person, feel free to call out my laziness: since July, we have actually raised our 2023 U.S. corn acreage estimate from 90M to 92M acres. Other early speculation points to corn acres being 94 - 95M in 2023. This is even more demand and does not take into global demand. Even with application cuts, the demand is still large.

Bearish Factors

Lithuania gives in and allows Belarus to flow potash to its ports – damnit, this is important so I'm going to keep repeating it and there is a reason it is listed first here: the world wants to punish both Russia and Belarus for their parts in the invasion of Ukraine. However, the world also realizes just how important feeding its people is. Without potash, it is hard to grow crops. If Lithuania gets enough pressure to drop the shipment ban, we could see a full return of Belarus shipments. Adding that flow would cause prices to fall overnight and a situation like this could happen overnight...doesn't seem likely today but it is possible.
Buyer resistance – this is something that we are hearing mixed reports about. There are some farmers that are saying that looking at their 2023 crop cycle shows solid profits so they are going to do everything they can to maximize yields. That includes applying heavy potash rates. However, there are a lot more that are pointing to struggling returns next year and/or a lack of financing. That 2nd group could be big enough to push price ideas further down.
Potash production costs remain very low - just because the cost of production is very low does not mean that prices have to fall. Look at nitrogen. We are not seeing N.A. producers dropping their price hundreds of dollars because they can. However, what it DOES mean is that if necessary, producers can drop their price by a lot to bring demand forward. If demand this fall is poor and inventory levels grow, we could see prices decline further in an attempt to bring buyers forward.

Where are the current potash/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 potash
Spend 60 bushels to pay for 1 ton of potash

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 potash 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

Lithuania...watch Lithuania - one of the first things I do each morning is google Lithuania to see if there is any change. In my mind, Lithuania is the single biggest factor out there. If they let Belarus exports resume, prices are falling and falling hard. As long as the ban is in place, prices are probably seeing a little pressure but nothing huge. There are a lot of other things to watch but for me, this is number 1.
Help is on the way - well, maybe not for this growing cycle ('23 crop) but it is on the way. There are some expansions to production coming in Canada. Russia has some projects that will be coming online. Eventually, Belarus will return. Whether that is more immediate thru Lithuania or longer term with Russia reportedly building a deep sea port to export their products globally, we do not know but we are confident they will return. These all mean more supply which should lean very hard on prices. 2 - 3 years down the road, there should be plenty of supply to meet demand.
Do not miss an opportunity hoping it gets just a little bit better - I cannot count the times I have missed out on something because I held out just a little too long. We are living in a highly volatile world where single digit price moves are not worth discussing, double digit moves barely catch our attention and triple digit moves not terribly uncommon. Sure, waiting may result in much bigger margins...or they can result in missing the chance of the year. Given all the uncertainty ahead, do not be afraid of locking in profits. Don't look back...
Work WITH your retailer - I know that a lot of farmers view their retailer almost as an adversary. I see it quite the opposite. I see them as some of the cheapest hired hands for farmers around world and play a crucial part in growing the crops that feed the world. That said, I implore you to have conversations with your retailer/coop/etc. I'm guessing that you are looking at current potash values and are nervous about pulling the trigger on your fall/winter/spring needs for fear of prices falling thru the floor. Imagine it from their POV. They have to buy for their entire territory and hold that price risk until farmers show up checks in hands. A lot of the retailers lived thru the 2008 debacle and watched friends lose their jobs and their companies. There is a lot of risk and volatility out there today. The more we can communicate about our needs, the better chance we have of making it thru this fertilizer year.

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.