World potash shipments will “plunge” by up to 15% this year, thanks to constraints on Belarusian and Russian supplies, Mosaic said as it slashed 6m tonnes from its forecast, while cutting hopes for phosphate volumes too.
The US-based fertilizer giant downgraded to 61.0m-65.0m tonnes its forecast for world industry potash shipments in 2022 – implying a slump of up to 10.4m tonnes from the volumes achieved last year.
The revision was “primarily driven by constrained supply from Belarus, as well as Russia, resulting in lower availability in almost all markets,” Mosaic said.
“Russia accounts for 20% of the world’s nitrogen, phosphate, and potash exports. When combined with Belarus, 40% of the global potash supply is at risk.”
Both countries are the target of Western sanctions because of their involvement in the Ukraine war, with the likes of the US already having imposed trade bars on Belarus, blamed for creating a migration crisis at its border with the EU.
‘Plunge in shipments’
Potash volumes may decline in all regions except the former Soviet Union itself, which “could become the only growth market in 2022 in the face of still-healthy farm economics and protective domestic ag policies”.
Mosaic added that the “plunge in shipments is… expected to prevent any meaningful rebuild of the already low global pipeline this year” in potash supplies.
Indeed, the squeeze on supplies implied that “some demand goes unfulfilled, providing a ‘catch-up’ demand tailwind over the medium term”.
The clamour for constrained supplies had already sent prices soaring to, reportedly, about $1,000 per tonne in South East Asia, more than three time year-ago levels, with values in Brazil approaching $1,200 per tonne.
For phosphate, the group downgraded its forecast for world shipments this year by a more modest 2m tonnes at both ends of the range, leaving it at 72.0m-75.0m tonnes, ruling out any chance of an increase from last year’s 75.8m-tonne result.
Mosaic cited for the revision “lower expected supply – including lower production in Russia and Lithuania – and demand rationalisation necessary to balance the market.
“We expect supply responses from other parts of the world are not enough to offset production disruptions from former Soviet Union in 2022.”
The group noted too a reduction in phosphate supplies from China, with exports tumbling by 2m tonnes to 2.5m tonnes in the October-to-March period.
The comments came as Mosaic unveiled a seven-fold rise to $1.18bn in earnings for the January-to-March quarter, on revenues up 71% at $3.92bn, reflecting soaring nutrient prices, which more than offset the impact of some decline in sales volumes.
Earnings per share, at $2.40, came in $0.01 ahead of market expectations.
Mosaic shares, after a weak start, recovered to stand 8.5% higher at $67.70 in late trading in New York.