JDs Couch
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Experts say a parallel crisis is looming – a considerable threat to global food security, caused by a looming shortage of fertiliser, essential for food production.
Why is there a shortage of fertiliser?
Nearly half of the world’s traded urea – the most widely used fertiliser – and large volumes of other fertilisers are exported from Gulf countries via the Strait of Hormuz, making global agriculture highly exposed to any disruption there.
Recent disruptions to gas supplies and shipping have already forced fertiliser plants, which use natural gas to manufacture fertiliser, in the Gulf and beyond to shut or cut their output.
Since LNG output from Qatar has dropped off, India has cut output from three of its own urea plants. Bangladesh has also shut four out of its five fertiliser factories.
The US is already close to 25 percent short of fertiliser supply for this time of year.
Compounding shortages, urea export prices from the Middle East have surged by about 40 percent, rising from just less than $500 to a little more than $700 per metric tonne as of last Friday, according to Argus, a specialist energy and commodities price reporting agency. The price is currently close to 60 percent higher than this time last year.
How much of the world’s fertiliser does the Gulf produce?
According to one shipping services company, the Signal Group, 20 percent of the world’s fertiliser originates in the Gulf, while 46 percent of global urea supply comes from the Gulf.
Qatar Fertiliser Company (QAFCO), considered the world’s largest urea supplier, alone supplies 14 percent of the world’s urea.
Analysis by Kpler, a data and analytics company, shows that as much as one-third of global fertiliser trade could be disrupted if the closure of the Strait of Hormuz persists – only a handful of Indian, Pakistani and Chinese-flagged vessels have been allowed to pass safely in recent days.
According to Morningstar analyst Seth Goldstein, nitrogen fertiliser prices could roughly double from current levels and phosphate prices could climb by about 50 percent, the Reuters news agency reported this week.
Why is there a shortage of fertiliser?
Nearly half of the world’s traded urea – the most widely used fertiliser – and large volumes of other fertilisers are exported from Gulf countries via the Strait of Hormuz, making global agriculture highly exposed to any disruption there.
Recent disruptions to gas supplies and shipping have already forced fertiliser plants, which use natural gas to manufacture fertiliser, in the Gulf and beyond to shut or cut their output.
Since LNG output from Qatar has dropped off, India has cut output from three of its own urea plants. Bangladesh has also shut four out of its five fertiliser factories.
The US is already close to 25 percent short of fertiliser supply for this time of year.
Compounding shortages, urea export prices from the Middle East have surged by about 40 percent, rising from just less than $500 to a little more than $700 per metric tonne as of last Friday, according to Argus, a specialist energy and commodities price reporting agency. The price is currently close to 60 percent higher than this time last year.
How much of the world’s fertiliser does the Gulf produce?
According to one shipping services company, the Signal Group, 20 percent of the world’s fertiliser originates in the Gulf, while 46 percent of global urea supply comes from the Gulf.
Qatar Fertiliser Company (QAFCO), considered the world’s largest urea supplier, alone supplies 14 percent of the world’s urea.
Analysis by Kpler, a data and analytics company, shows that as much as one-third of global fertiliser trade could be disrupted if the closure of the Strait of Hormuz persists – only a handful of Indian, Pakistani and Chinese-flagged vessels have been allowed to pass safely in recent days.
According to Morningstar analyst Seth Goldstein, nitrogen fertiliser prices could roughly double from current levels and phosphate prices could climb by about 50 percent, the Reuters news agency reported this week.
