Facing rise in cost of natural gas, plants in Europe are closing, tightening global supplies.
(Bloomberg) — North American fertilizer prices are spiking as plant closures in Europe squeeze supplies.
An index of weekly North American fertilizer prices by Bloomberg’s analysis organization Green Markets rose by over 11% Friday, the most since March, as an energy crunch in Europe forces some plants to close or curtail production. Natural gas is the No. 1 input for most nitrogen fertilizer. The common nitrogen fertilizer ammonia in the US Corn Belt saw prices rise nearly 24%.
“Nitrogen prices rose in response to a wave of European ammonia closures last week,” said Alexis Maxwell, an analyst at Green markets. “More than two-thirds of European ammonia production remains offline on high cost inputs, namely natural gas.”
The cost of growing food in the US is on track to jump by 18%, the most ever, and fertilizer prices are experiencing one of the top leaps in cost, according to the USDA. The boom in America’s farming costs comes as the world increasingly turns to the US for supplies as the war in Ukraine roils commodity markets and disrupts crucial grain shipments from the Black Sea, one of the world’s breadbaskets. Global food prices have touched records in recent months as inflation ripples through economies and levels of hunger are on the rise.
Read more: The cost of growing food in US is set to rise by most ever in 2022
“Farmers will have to re-pencil crop budgets as nitrogen fertilizers are likely to remain higher for longer as pricey natural gas curtails ammonia production,” Maxwell said.
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