Crop Comments: Potash may be trapped in another trade war
Let’s go back to late February 2026, when we saw military action between Iran and the U.S. Transportation of Middle East crude oil, through the Strait of Hormuz, was becoming very sluggish. Artificially reduced crude oil supply, destined for the U.S., forced oil prices past $100/barrel in early March. This was a result of intensified conflict between the U.S./Israel and Iran. The conflict targeted energy infrastructure in the Middle East and threatened the shipping lanes in the Strait.
With very few exceptions, disruption of energy supply/demand scenarios rapidly impacts the global fertilizer economic picture. My most informed contact in the fertilizer industry is Jeff Cassim, general manager of Liquid Products in Seneca Falls, NY. With all the excitement in the Middle East energy arena ongoing, Cassim made sure I received the most recent edition of his fertilizer industry periodical, dated Sept. 10.
According to this periodical, “The U.S. has become an attractive destination for Russian urea volumes in the Baltic, but availability from Russia has been minimal, with upcoming plant maintenance in their country and sales commitments to Brazil. Normally the Middle East might ship to the U.S., but the global urea market remains deprived of the majority of supply from the region, due to the ongoing conflict between U.S./Israel and Iran.”
In addition to the above, daily Port of New Orleans urea price increases tend to run parallel to the U.S. corn and natural gas markets. (Remember: natural gas is the main precursor for urea.) Not surprisingly, higher EU natural gas prices are causing concerns that production cuts could divert tonnages away from the U.S. – thus, urea prices increased stateside, with Mississippi River warehouses topping $500/short ton in early September. According to the same reporters, “Diammonium phosphate (DAP) re-export at NOLA drove prices higher as traders looked to capture a premium in the global market while the U.S./Israel conflict with Iran unfolds.”
The ammonium sulfate market traded higher in the wake of this conflict, which threatens to tighten global ammonia and sulfur feedstock availability. Ammonia-laden vessels are currently unable to move in or out of the Mideast Gulf because of this conflict. Most ship owners are trying to avoid transit through the Strait of Hormuz whenever possible.
Sulfur exports from the Middle East remain subject to delays following the backlog of vessels building up outside the Strait since the March 1 attack on Iran.
Now let’s examine some current fertility commodity prices quoted from Cassim’s resources, the most prominent being the Argus Industry Newsletter for Sept. 10. The following values are strongly influenced by the above-mentioned geopolitical facts. These are average values calculated from a range of dollar prices per short ton for the day of the quote. The location of the quote is the freight point of origin nearest the Northeast. In parentheses is that particular commodity’s price a year earlier: Urea (Cincinnati) $508 ($460); ammonium nitrate (Mid-South) $460 ($320); ammonium sulfate (Minneapolis) $378 ($368); urea/ammonium nitrate (Cincinnati) $373 ($369); ammonia (Eastern corn belt) $823 ($715); DAP (Cincinnati) $850 ($850); mono-ammonium phosphate (Cincinnati) $845 ($843); muriate of potash (Vancouver) $306 ($310); sulfate of potash (West Coast) $720 ($693); and sulfur (Gulf Coast) $693 ($127).
With the exception of the almost-ballistic price rise for sulfur, most of the other fertilizer commodity price movement was comparatively tame. An exception would be the dramatic price spike experienced by other plant food ingredients in March due to last-minute postponed purchases by growers.
Farm Bureau economist Shelby Myers noted fertilizer is a global commodity and can be influenced by multiple market factors beyond the control of U.S. producers. Similar to globally traded non-agricultural commodities, 44% of all fertilizer materials are exported to a different country. This factor has an outsized impact on fertilizer prices, because fertilizer production is influenced by events occurring where it is produced and the cost of production in that country of origin. It’s also affected by many other countries demanding fertilizer products, plus transportation services to get these plant foods to their final destinations.
Across the Atlantic, we see the Canadian firm Saskatchewan Mining & Minerals has acquired U.S. specialty fertilizer and salt business Compass Minerals’ (CM) sulfate of potash production facility in Wynyard (in that province). The transaction occurred because CM considered the asset to be surplus to its portfolio. However, hidden behind the apparently very stable Canadian potash prices (Vancouver: $306 – $310), a tariff dynamic is about to assume center stage. The U.S has begun levying tariffs on many Canadian products. Earlier tariff skirmishes between Canada and the U.S. left imported fertilizer, primarily Canadian potash, alone. (Those Vancouver prices did not include tariffs.)
As I researched this column, tapping into Cassim’s wisdom, he questioned, “Why after decades of amiable fertilizer trade between two neighboring countries are tariff conflicts (up to 50%) threatening to torpedo friendship between Canada and the U.S.?”
In an article titled “Potash is Canada’s Reserve Weapon in the Trade War,” Bill Fernie (Caithness Business Index) wrote that Canadian tariff policy “has the ability to hurt American farmers very quickly, but using it could damage Canadian producers and encourage America to permanently diversify away from Canadian fertiliser (sic). That makes the fact that Canada has specifically left potash outside its latest retaliation quite significant.”
To me this approach is similar to President Teddy Roosevelt’s mindset: “Speak softly and carry a big stick; you will go far.”
With me sounding once again like a broken record, if ever there was a time to soil test, it’s the present. If too-low pH is a factor limiting crop performance, applying lime is always a paying proposition, particular for phosphorus. Raising soil pH from 5.8 to 6.8 more than doubles the bioavailability of this nutrient to plant’s root systems.
And potash (as is increasingly evident) is clearly poised to become a second weak link in American food security. Lime costs have increased less in the last 40 years than all the other crop inputs listed above. It is a domestic input, seldom if ever contacting a barge.
by Paris Reidhead
