As a result of the interruption of traffic in the strait of hormuz in mid-march, there was a global supply shortage of commodities such as energy and fertilizers. On tuesday, another major international fertilizer supplier, russia, announced a one-month moratorium on the export of ammonium nitrate。
Ammonium nitrate is a form of nitrogen fertilizer, while russia controls up to 40 per cent of the global trade in ammonium nitrate, and exports are not expected to resume until 21 april. The russian initiative is mainly aimed at securing supplies for the russian mainland spring planting season。
The russian ministry of agriculture has indicated that all licences issued for the export of ammonium nitrate have been suspended and that new licences will not be issued, except for those relating to government contracts. Given the growing demand for nitrogen fertilizer exports, the russian suspension of external supply would give priority to the domestic market's needs during the spring field operations。
Since 2021, russia has been pursuing an export restrictive policy whereby the government requires producers to give priority to domestic market demand rather than exports。
Long-term high prices
The strait of hormuz transports 24 per cent of the global ammonia, which is a raw material for the production of ammonium nitrate. Ammonium nitrate was widely used in agricultural production at the beginning of the planting season, and current shortages could increase competition in the market for limited fertilizer stocks, thus pushing up food prices。
In addition to the supply constraints caused by the iranian conflict, russia's nitrogen fertilizer production capacity has been affected by attacks in ukraine. The country's major nitrogen fertilizer producer, dorogobuzh pjsc, was caught in fire in an attack in late february and is expected to cease production until may。
Russia is the major supplier of fertilizer to brazil, a major agricultural producer, accounting for 25. 9 per cent of the total imports of fertilizer in brazil, and thus the russian moratorium on ammonium nitrate exports could be detrimental to brazilian agricultural production. In addition, russia exported ammonium nitrate to countries such as india, peru, mongolia, morocco and mozambique, and partially exported fertilizer to the united states in 2024。
In a report, jeffrey analyst stated that fertilizer prices would remain high over the long term owing to the destruction of infrastructure in the middle east. In addition, fertilizer producer yagi international has suspended its production at australian factories and will further reduce fertilizer supply。
