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Sunday, August 14, 2022

Fertilizer Prices Sky High as World’s Largest Nitrogen Plant Declares “Force Majeure”

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Spot prices for nitrogen fertilizer on the US Gulf Coast skyrocketed to a near-decade high on a report the world’s largest nitrogen manufacturing plant declared force majeure.

CF Industries Holdings Inc. in Donaldsonville, Louisiana, closed its massive complex ahead of Hurricane Ida. The complex has 19 plants, including six ammonia and five urea facilities, producing nitrogen-based products for agricultural and industrial markets.

According to the letter seen by Bloomberg, CF Industries said, “due to these circumstances, CF Industries Sales, LLC has declared an event of force majeure affecting the production and shipment of product from the CF Donaldsonville, LA nitrogen complex.”

The letter was dated Sept. 3, and at that time, the facility remained closed. This stoked fears of production declines at a time when supplies are already tight.

As a result of the force majeure, US Gulf urea nitrogen fertilizer spot prices spiked 16.5%, according to Green Markets data.

Scotiabank commodity analyst Ben Isaacson told clients that nitrogen fertilizer prices on the Gulf Coast are surging due to “uncertainty surrounding the restart of CF’s Donaldsonville plant.”

He added there is increasing concern that other surrounding plants are down due to lack of electricity and possible storm damage.

Before Ida, there was surging demand for US Fertilizer as soaring commodity prices allowed farmers to expand crop production, boosting demand for nutrients essential to producing food.

A recent Rabobank commodity note explained farmers are expanding plantings and dispensing more fertilizer on fields to increase crop yields. The Dutch bank warned, higher prices will curb purchases of fertilizers.

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