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Market Forecast For Phosphate, Potash And More – Cannabis Hemp Blog
Jan
Find out what is in store for the agriculture sector in 2023!
The Investing News Network (INN) spoke with analysts, market watchers and insiders about which trends will impact this sector in the year ahead.
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A Sneak Peek At What The Insiders Are Saying
“(Climate change is) certainly a factor to consider, but the growing global population is by far the bigger influence on (potash) supply/demand dynamics. People have to eat, and fertilizers are the key to meeting that demand. Potash supply and demand will continue to increase over the next 10 years.”
— Andy Hemphill, ICIS Fertilizers
“High (phosphate) prices are prompting comparisons to 2008, as well as questions about if and when the prices will decline. There has also been some excitement lately about rapidly growing phosphate demand in electric vehicle batteries, though the market is very small and largely confined to China.”
— Glen Kurokawa, CRU Group
“Following a nearly doubling in 2021, (diammonium phosphate) prices are expected to experience a modest increase in 2022 on expectations of continued tight supply.”
— World Bank, Commodity Markets Outlook
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Agriculture Investing In 2023: Market Forecast For Phosphate, Potash And More
Table of Contents
Agriculture Market Update: H1 2022 in Review for Potash and Phosphate
Agriculture Market Forecast: Top Trends That Will Affect Potash and Phosphate in 2023
Top 10 Potash Countries by Production
10 Top Phosphate Countries by Production
Agriculture Market Update: H1 2022 in Review for Potash and Phosphate
Potash and phosphate prices continued to trend higher in H1 2022. Find out what factors moved the market and how the second half of the year is shaping up.
Values across the agricultural input space remained elevated over the first half of the year, driven by high energy costs and supply disruptions largely stemming from the conflict in Ukraine.
These issues were further compounded by continued strength in demand across the sector, as well as mounting costs for freight transport and trade rerouting. “Fertilizer prices have reached a record high on the back of the war in Ukraine and its repercussions on trade flows. Russia is a key exporter of nitrogen, phosphate and potash fertilizers,” Chris Lawson, head of fertilizers at CRU Group, wrote in a March note.
In addition to these broad factors impacting the sector, the potash and phosphate markets have also faced weather-related production woes and ongoing import sanctions from Belarus.
Over the first six months of 2022, phosphate prices surpassed the US$1,000 per metric ton (MT) level for the first time since 2008, while spot potash values reached an all-time high of US$1,210 per MT in April.
Some of the upward momentum both markets experienced during H1 has dissipated into Q3, but values remain historically high. As a February FocusEconomics report notes, if prices remain persistently high, farmers will have reduced profit margins, which could lead to a decline in corn crops in particular.
“Competition for available farmland could be particularly stiff in the next season, especially in the US and Ukraine. Seeding intentions could also be complicated by the recent surge in fertilizer prices, which could incentivize some shifting into other crops (and away from corn),” the report reads.
Analysts expect a 1 percent increase in corn production this year, taking outputs to a record 385 million MT.
The FocusEconomics outlook continues: “However, as maize requires relatively intensive use of fertilizers, herbicides and pesticides compared with alternatives, including soybeans, much may depend on whether the recent rally in input prices is sustained over the coming months.”
Price shocks will not be limited to corn, either, as higher values across the agricultural input market continue to push prices for most foods higher.
“With food commodity prices already having increased by an additional 6 percent this year and our strategists expecting them to rise further on net over the next couple quarters, the stage has been set for further substantial increases in retail food prices this year,” the report explains.
Phosphate price update: Production decline offset by demand drop
Looking first at phosphate, high crop prices are one of the major tailwinds propelling values; however, as CRU’s Glen Kurokawa explained, tight supply was especially impactful over the first six months of 2022.
“There was a lot less supply than what was expected from major phosphate producers and exporters. So that includes China, which has been restricting its phosphate exports,” Kurokawa said during a mid-May webinar.
This was further heightened by slight declines in supply out of Morocco and Saudi Arabia, in addition to disruptions out of Russia — the fourth largest producer — which hampered exports.
The senior phosphate analyst also attributed rising nitrogen values and higher crop prices despite phosphate outpacing the latter. “In other words, phosphate affordability has declined,” said Kurokawa, adding that the reduction in affordability will be a precursor to a 5 percent decline in phosphate demand.
Some of this will be offset by a 5 percent supply decrease, consisting of a 3 million MT decline in available phosphate out of China as the country tries to drive down domestic prices with its own supply.
“We expect the Chinese export restrictions to last into 2023 … because phosphate prices are still going to be high for the first half of 2023,” he said. “But thereafter, we expect some of the restrictions to be eased, but then there’ll be less reason to export a huge amount, because the phosphate prices will be coming down internationally.”
CRU also expects phosphate supply out of Russia to grow in 2023, even though Europe is turning away from sourcing the crop additive there due to the war. Instead, shipments to Brazil, India and elsewhere will support Russian exports.
Potash price update: Limited Belarus and Russia exports catalyze prices
Many of the larger factors weighing on the phosphate market are also impacting the potash sector, in addition to sanctions against Belarusian imports to the European Union (EU) and US.
In response to Belarusian President Alexander Lukashenko’s mounting human rights abuses, the EU began levying sanctions on Belarus in June 2021, some of which targeted the country’s potash sector.
Last year, Belarus ranked third in annual potash production, outputting 8 million MT of the crop fertilizer.
US sanctions aimed at Belarus’ potash sector went into full effect in April of this year, piling onto constraints on Russian supply caused by Russia’s invasion of Ukraine. Only Russia and Canada top Belarus’ annual potash output, with Russian production accounting for 9 million MT of new global supply.
“Russia has had far fewer measures directed at its fertilizer industry than Belarus, with bulk volumes continuing to flow from Russian ports to most downstream markets,” Humphrey Knight of CRU said in July. “H1 volumes to Brazil reached a record high in 2022, although shipments elsewhere are down slightly year-on-year.”
During the first half of the year, Brazil also saw muriate of potash (MOP) prices reach a new record nominal high of US$1,210 in April. “The benchmark also saw the largest week-on-week MOP spot price increase ever recorded by Fertilizer Week,” continued Knight, who was speaking during a webinar and is his firm’s senior potash analyst.
The senior analyst went on to point out that the sustained high price points for MOP have resulted in a decline in the premium paid for higher-quality sulfate of potash (SOP). “That’s more just a reiteration of how rapidly MOP prices have risen rather than anything particularly related to the SOP market,” he said.
Potash’s steep price growth in late 2021 and early 2022 has eroded affordability following several years of weak values and surging demand. As Knight explained, “Consumers took advantage across all key downstream markets, intensifying purchasing. (As a result) global MOP demand surged to a record high 71.6 million MT in 2020.”
In 2021, demand surpassed 70 million MT “with exceptionally strong demand in spot markets.” Now, with consumes’ coffers full, prices higher and challenges in supply and transportation, CRU expects demand to decline.
“In 2022, demand (is) expected to be universally lower across all downstream consuming regions, in part due to less favorable affordability,” a slide from the firm’s February presentation outlines. “Demand rationing will be the principal driver amid major supply disruption.”
Potash price update: Canadian supply key to market
With Belarus and Russia accounting for 40 percent of the potash market, Canadian output will be more important than ever in 2023. Annually, Canada contributes 14 million MT of potash to the market — 30 percent.
The North American nation also houses 4.5 billion MT of the world’s estimated 11 billion MT of recoverable ore, according to the US Geological Survey.
Looking to access some of those reserves is Gensource Potash (TSXV:GSP), a Saskatchewan-based developer advancing the Tugaske project. In June, the Investing News Network spoke with President and CEO Mike Ferguson about the potash market and Gensource’s plans to expand the production potential at Tugaske.
“It’s really been in the discussion since the beginning,” said Ferguson of the company’s June announcement to increase production capacity at Tugaske from 250,000 MT per year to 500,000 MT. “Because fundamentally, we are a modular, scalable company; we’re here to start and then scale up. So, you know, we can scale into the millions of tonnes just like the other large mega projects — the difference is how you get there.”
Gensource’s small-scale production process has been hailed as more environmentally friendly than other potash processes, particularly because there are no salt tailings or brine ponds. “We actually use 75 percent less water per tonne of product compared to conventional solution mining methods. So, all those things combined give our project an environmental profile that is head and shoulders above anything else in the industry,” Ferguson said.
The company’s goal is to offer an alternative to the “mega multi-million-tonne projects,” and with that in mind, Gensource is using a buildable design to enter the market strategically.
“We started the company eight or nine years ago now, with the express purpose of doing the potash differently,” Ferguson explained. “Right now, the potash industry is characterized by a very tightly controlled industry. There’s five players that control up to 80 percent of the market.”
Potash price update: High crop prices to continue
Potash prices have declined in Q3, but experts agree that they are not likely to return to their previous lows.
“I think the current prices, to be honest, are probably not sustainable in the long term. They are a function of the current supply shocks,” Ferguson said.
However, he believes there has been a “structural change in supply” across the fertilizer space. “Potash more so than the others because of the problems on the supply chain,” he added. “The price, yes, it will come back down off these highs, but it will never go down to the lows that we saw, you know, five and 10 years ago.”
For Knight, the downtrend in potash prices will continue for now. “CRU originally expected downstream spot prices to fall to around US$800 to US$860 by the end of 2022,” he noted during the July market review. “(Now it) appears further downside to prices now more likely during 2022 H2, but still at gradual pace.”
Even if fertilizer prices decrease into 2023, the already record-setting values paired with inflation have sharply increased the price of food, as the report from FocusEconomics outlines.
“With food commodity prices already having increased by an additional 6% this year and our strategists expecting them to rise further on net over the next couple quarters, the stage has been set for further substantial increases in retail food prices this year,” the document states.
This idea is reiterated in the University of Illinois’ 2023 Nitrogen Fertilizer Outlook, which states that food prices will trend higher in 2023, in turn increasing breakeven prices for farmers.
Next year, the breakeven price for corn will be near US$5 per bushel, while for soybean the breakeven price will be US$11. “Continuing high fertilizer prices and increases in all production costs point to the need for high corn and soybean prices to remain profitable,” the university report states.
Ultimately, both potash and phosphate are crucial to crop growth and health, especially in an increasingly precarious environment.
“Fertilizer/plant nutrition is one of many variables in farming systems and a prolonged period of fertilizer under application will impact longer term yields,” Lawson wrote.
“Given the already tight grains and oilseeds market, and the importance of both Russia and Ukraine in those markets, food price inflation is an increasingly prominent risk.”
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Additional information on investing in agriculture stocks — FREE
Agriculture Market Forecast: Top Trends That Will Affect Potash and Phosphate in 2023
Fertilizer prices soared to new highs in 2022, putting pressure on farmers and food supply. Find out what’s in store for the market in 2023.
Fertilizer prices surged to new heights in 2022, continuing a trend that began in 2021. The toll of war, rising gas costs, Chinese export issues and high crop prices pushed both phosphate and potash to record levels in April.
“Agricultural prices reached record highs in Q2 2022 as grain prices shot up in the aftermath of the war in Ukraine — both Russia and Ukraine are key global grain producers,” FocusEconomics‘ latest commodities outlook reads.
However, during the second half of 2022, demand destruction resulted in a 10 to 40 percent decline in consumption for both phosphate and potash, which pushed values lower.
A July agreement that ended Russia’s blockade on Ukraine’s agricultural exports also weakened prices, while an increase in production out of Canada eased some of the supply tension stemming from the war and Chinese shipment curtailments.
Experts polled by FocusEconomics anticipate that agriculture prices will “(trend downwards) in the quarters ahead amid softer demand, but remain above pre-pandemic levels.” Price support will come from factors such as lower Ukrainian grain output and high fertilizer prices, which “could dampen crop yields in 2023.”
Demand is forecast to contract, but soil quality hasn’t improved, which is likely to hinder crop yields. Smaller crop yields are likely to add to the mounting cost of food, driven higher in recent months by inflation.
How did phosphate perform in 2022?
After rallying to an all-time high of more than US$1,000 per metric ton (MT) in April, phosphate prices came down significantly in the latter half of 2022, ultimately ending the year lower than they started.
The crop additive began the year at US$713, with values continuously moving higher through April, when concerns around Russian and Ukrainian grain and fertilizer exports reached a fever pitch.
The phosphate market was further impacted when China suspended exports through June to ensure enough domestic supply.
“Chinese fertilizer exports fell sharply in 2022 on government-imposed barriers. These barriers are set to remain in 2023, but as global and domestic prices move lower, we anticipate some relaxation,” an outlook report from CRU Group notes.
Diammonium phosphate’s price performance in 2022.
Chart via TradingEconomics.
According to CRU, phosphate exports out of China topped 10.7 million MT in 2021, but contracted to 5.4 million MT in 2022. The consultancy expects some rebound in 2023, when shipments should tally 6.7 million MT. Annually, China is the top producer of phosphate, with output of 85 million MT in 2021. Russia ranks fourth, producing 14 million MT the same year.
By the end of June, phosphate prices had slipped back to the US$789 level.
The hidden costs of high fertilizer prices
Even though phosphate prices ended 2022 below their starting value, the true cost of the record-setting rise is yet to be felt.
The International Fertilizer Association estimates that 85 percent of the world’s soils are deficient in nitrogen, while 73 percent are deficient in phosphorus (phosphates) and 55 percent are deficient in potassium (potash).
These deficiencies make fertilizers essential to crop growth. But to counter broad-based increases in overhead costs, many farmers are opting to limit the amount of fertilizer they purchase and use. This is expected to impact soil health and crop yields.
“The fertilizer supply/price crisis is in many respects more concerning than direct food inflation because it could inhibit food production in the rest of the world that could eventually help take up the slack from stalled Russian and Ukrainian grain deliveries,” Maximo Torero, chief economist for the UN Food and Agriculture Organization, told Reuters.
He explained that this will have a knock-on effect that will ultimately drive up the cost of food. “High fertilizer prices could have farmers worldwide reducing planned harvests and the amount of land they are planting — with the risk of depressed yields in the 2022/23 crop season — adding to the shortage of imported grains and putting food security at even greater risk,” Torero said.
As the global food system slips into precarious territory, demand for wheat is expected to hit a fresh high in 2023.
“Recent increases in global wheat demand for food use have been fuelled mainly by growing populations and shifts in diets and incomes,” Economist Intelligence Unit members said. “Ongoing population growth across parts of Africa and Asia will underpin further expansion in 2022/23, where we forecast that food use will reach a record 546m tonnes.”
How did potash perform in 2022?
Potash faced similar hurdles to phosphate in 2022. The most prevalent was the market’s exposure to Russian disruption.
“In terms of production capacity, potash is certainly the most exposed to disruption from both Russia and Belarus when compared to other major fertilizers,” Humphrey Knight, potash principal analyst at CRU, told INN.
Taking the second and third respective spots on the top potash producers list, Russia and Belarus produced a combined 17 million MT of potash in 2022. Canada was in first place with 14 million MT.
“Prior to 2022, the two countries accounted for around 40 percent of global supply. Although exports from both countries have faced disruption in 2022, particularly from Belarus, product has continued to flow to many downstream markets,” Knight said.
Muriate of potash (MOP) started 2022 at US$221 per MT, but the conflict in Ukraine and sanctions against Belarus drove prices to US$562 in March, the highest level since February 2009. MOP prices remained at that level for the rest of the year.
MOP is the most commonly used form of potash and is more affordable compared to sulfate of potash
Price performance of diammonium phosphate, urea and MOP from 2016 to 2022.
Chart via Bloomberg and the World Bank.
Higher potash prices causing demand destruction
While phosphate moved lower during H2, potash remained elevated off of continued supply concerns. Fears that supply will be further depleted by Russia’s invasion of Ukraine heightened the impact of 2021 sanctions targeting Belarusian potash exports.
“The (Russian) trade sanctions have specified ‘carve-outs’ for the food and fertilizer sectors to avoid adverse effects on global food security,” a World Bank blog post reads. “These carve-outs have enabled Russia to continue exporting fertilizers. However, potash exports from Belarus have fallen by more than 50 percent due to the restriction on using EU territory for transit purposes.”
Picking up some of that slack is Canada, where the nation’s potash producers have started to ramp up output.
“Canada’s largest producers, Nutrien (TSX:NTR,NYSE:NTR) and Mosaic (NYSE:MOS), maintain plans to reactivate capacity the companies had previously idled, at least partly in response to the supply disruption in Russia and Belarus,” said Knight.
However, as Knight went on to explain, 10 months of persistently high prices have led to potash demand destruction.
“Mosaic recorded only a modest year-on-year increase in potash sales in the first nine months of 2022, and Nutrien saw potash sales decline over the period,” he said. “Despite the supply disruption, demand has been weak, and the Canadian producers have consequently not been able to take advantage of the supply gap.”
What factors will move the agriculture market in 2023?
Looking ahead, Knight expects 2022’s price surge to have lasting implications for farmers.
“Some spot prices hit record highs in 2022, and this has made potash affordability very unfavorable for consumers,” he said. “Consequently, many have reduced potash consumption significantly and global demand has weakened.”
As farmers reduced their use of fertilizer, many began experimenting with nutrient efficiency and enhancing products. According to CRU, this is something that could happen more in the future.
“As capital markets tighten and fertilizer producers hold flush cash balances, 2023 could be the year to ‘roll the dice’ and acquire companies with patented new plant nutrition technologies,” the firm’s outlook report reads.
Following 2022’s demand destruction, Knight believes the sector could recapture lost buying if prices retract.
“The potash market certainly remains exposed to further disruption to production into 2023, and could see supply tighten quickly if demand recovers rapidly from its current lull,” he said.
The principal analyst at CRU concluded, “However, a more gradual recovery in demand appears more likely (in 2023), meaning supply should remain adequate.”
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Additional information on investing in agriculture stocks — FREE
Top 10 Potash Countries by Production
Canada leads the top potash countries by production, but what are the other major producers? This list outlines the top 10.
The top potash countries by production rode out the COVID-19 storm that devastated many commodities markets in 2020, and robust demand pushed prices to a 13 year record high in the second half of 2021.
Those same supply and demand dynamics have continued well into 2022, sending potash prices even higher. In mid-May, the World Bank reported that global fertilizer prices were up 30 percent for the year so far, and said that those price-positive market conditions are expected to continue throughout the year and beyond.
In fact, bullish sentiment in the potash industry has major market participants such as BHP (NYSE:BHP,ASX:BHP,LSE:BLT) investing billions in new potash fertilizer production.
That’s welcome news for potash investing — many potash-mining operations have closed in recent years, and some are waiting on the sidelines for better days and improvements in the potash price.
“World potash consumption in 2021 for fertilizers was estimated to have increased to 45 million tons from 44 million tons in 2020, as demand peaked in the first half of the year in major consuming regions,” according to a US Geological Survey (USGS) report. “Asia and South America continued to be the leading consuming regions. North America and South America and southeast Asia had the largest increases in consumption over that of 2020.”
Looking at supply, the USGS states that world potash capacity is projected to rise to 69 million metric tons (MT) in 2025 from 62.3 million MT in 2021. The increase is expected to come mainly from muriate of potash (MOP) from new mines and expansion projects in Belarus, Canada and Russia — the big three MOP-producing countries.
However, Independent Commodity Intelligence Services points out that Russia’s war in Ukraine, in which Belarus is complicit, has led to economic sanctions that may prove “disastrous for global food security,” as these two potash-producing nations struggle to find markets for their potash production.
The USGS estimates that global annual potash production reached 46 million MT in 2021. So what were the top potash countries by production last year? Read through the list below to find out.
1. Canada
Mine production: 14 million MT
Leading the list of the top potash countries by production is Canada. The nation is the world’s largest potash producer, with potash production growing by 200,000 MT in 2021 over 2020 production levels.
Nutrien (TSX:NTR,NYSE:NTR), the world’s largest potash company, is based in the Canadian prairie province of Saskatchewan. It was born from a 2018 merger between two crop nutrient companies, Potash Corporation of Saskatchewan and Agrium. The deal created “a global agricultural giant” now valued at more than US$65 billion.
2. Russia
Mine production: 9 million MT
In 2020, Russia overtook Belarus as the world’s second largest potash producer, with 8.11 million MT in production. In 2021, the country surpassed that, with potash production of 9 million MT. Uralkali is Russia’s premier potash company, as well as one of the world’s leading potash producers, accounting for roughly 20 percent of global supply. The company has five mines and seven ore treatment and processing mills.
3. Belarus
Mine production: 8 million MT
Potash production in Belarus rose by 600,000 MT from 2020 levels to total 8 million MT in 2021. Output in the Eastern European country has been on an upward trajectory since 2016, when its potash production total came in at 6.4 million MT. Belaruskali is the country’s largest industry operator, with six mines and four processing factories.
4. China
Mine production: 6 million MT
China is another of the top potash countries by production. Output in the Asian nation has remained relatively the same from 2016 to 2021, at around 5 million to 6 million MT. Potash is extremely vital in China — the country is the largest consumer of potash fertilizer, accounting for approximately 20 percent of world potash consumption.
China’s domestic demand for potash fertilizer is overtaking its homegrown potash supply, making the country reliant on potash imports, especially for MOP.
5. Germany
Mine production: 2.3 million MT
Although Germany produced 3 million MT of potash in 2019, production has fallen since then and came in at around 2.3 million MT of the material in 2021. K+S (ETR:SDF) is one of Germany’s leading potash miners and has a number of projects, operating six mines in three districts of the country.
6. Israel
Mine production: 2.3 million MT
Annual potash production in Israel has remained unchanged for the past few years, totaling about 2 million MT since 2017. The country is sixth in terms of potash production, and it also hosts the world’s sixth largest potash-producing company: Israel Chemicals (NYSE:ICL,TLV:ICL).
The company produces roughly a third of the world’s bromine, which is often extracted from the same salt water and brine deposits that produce potash.
7. Jordan
Mine production: 1.6 million MT
Potash production in Jordan increased marginally from 2020 to 2021. Arab Potash Company, located in Jordan, is the seventh largest producer of potash by volume, and is the sole producer of potash in the Arab region. It has helped make Jordan a key potash supplier for India and Asia. Both Israel and Jordan recover potash from the Dead Sea.
8. Chile
Mine production: 900,000 MT
Chile recorded production of 1.2 million MT of potash in 2018, the same as the prior two years; however, production dropped below 1 million MT in 2019 and slipped another 50,000 MT in 2020. Chilean potash production remained flat in 2021, coming in at 900,000 MT as it did the previous year.
One of the largest producers of potash in the country is SQM (NYSE:SQM), which is also a leading producer of lithium. South America in general is a large consumer of potash.
9. United States
Mine production: 480,000 MT
The US took the position of ninth largest potash-producing country in 2021. The US bumped the UK from the 10th spot on the list in 2017, and has continued to rank ninth or 10th since. Potash production in the US mostly takes place in New Mexico and Utah — both states have three potash operations each.
The country put out 480,000 MT of potash for 2021, a relatively steep drop from less than 10 years earlier in 2014, when output totaled 850,000 MT of potash. US potash goes largely to the fertilizer industry, which in turn uses the fertilizer to increase crop production and crop yields, as well as to improve soil health and water retention in crops. Any leftover potash output is used in the chemical and industrial sectors.
10. Spain
Mine production: 400,000 MT
In 2021, Spain’s potash output slipped by 20,000 MT from its 2020 level, dropping one spot to become the 10th largest potash-producing country. This figure is down from 2016, when the country produced 670,000 MT of potash. Spain has potash reserves of 68 million MT. The company Geoalcali has a few potash projects in the country, including Izaga, Muga and Sierra Del Perdon.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Additional information on investing in agriculture stocks — FREE
10 Top Phosphate Countries by Production
Phosphate demand is rising as the expanding global population boosts the agricultural industry. Find out which top phosphate-producing countries are feeding this demand.
Phosphate is mainly used in the form of fertilizer for crops and animal feed supplements. Only 5 percent of world phosphate production is used in other applications, such as corrosion prevention and detergents.
Demand for phosphate fertilizers has created a US$63.81 billion market in 2022, and that figure is expected to grow by a compound annual growth rate of 5.7 percent, coming to US$176 billion by 2040. “The global demand for phosphate is surging owing to the increasing world population resulting in rising food demand,” according to Grand View Research.
In its latest phosphate report, the US Geological Survey states that global production of phosphate remained flat in 2021 alongside rising demand for plant crops. This has led to phosphate prices trending higher throughout 2021 and into 2022.
The US Geological Survey reports that capacity expansion projects are underway in Brazil, Kazakhstan, Mexico, Russia and South Africa. But the agency notes that none of these projects are expected to be completed until after 2024.
Those interested in the phosphate-mining sector will want to keep an eye on phosphate production and mining companies in the space. Below are 2021’s top phosphate countries by production.
1. China
Mine production: 85 million MT
China’s phosphate production decreased in 2021 to 85 million metric tons (MT), down from 88 million MT in 2020, but it is still first on the list of top phosphate-producing countries. The drop in Chinese output is likely a result of the nation’s environmental crackdown on the mining industry in addition to the impact of the COVID-19 pandemic.
The country also has the second largest phosphate reserves in the world, with 3.2 billion MT of the commodity. China’s government has placed restrictions on phosphate exports in an effort to drive down domestic prices of the fertilizer with its own supply. China is also the fourth largest producer of potash.
2. Morocco
Mine production: 38 million MT
As the second largest phosphate-producing country, Morocco produced 38 million MT of the fertilizer in 2021. The North African nation’s phosphate output increased slightly last year due to ongoing capacity expansions.
Despite producing significantly less phosphate than China in 2021, Morocco has the largest phosphate reserves. With 50 billion MT stockpiled, the country accounts for over 70 percent of total global phosphate reserves.
3. United States
Mine production: 22 million MT
In 2021, US phosphate mining fell by 1.5 million MT from the previous year. The top phosphate-producing states, Florida and North Carolina, accounted for over 75 percent of domestic output. The other 25 percent of US production came from Idaho and Utah.
Most phosphate rock mined in the US is used for manufacturing phosphoric acid and superphosphoric acid. These types of wet-process phosphate products are used for items such as animal feed supplements. About half of this type of phosphate is exported in the form of merchant-grade phosphoric acid, granular diammonium and monoammonium phosphate fertilizer.
4. Russia
Mine production: 14 million MT
Russia’s phosphate output remained steady in 2021 from the previous year, coming in at 14 million MT. As per the US Geological Survey, the country has reserves of 600 million MT of phosphate. Russia is also the second largest producer of potash.
European nations were previously Russia’s biggest phosphate customers in the global market, but the country’s war in Ukraine is impacting which countries buy from Russia. The war has also directly influenced global phosphate prices.
Interestingly, CRU Group expects phosphate supply out of Russia to grow in 2023 — while Europe may be turning away from Russian sources of the crop additive, shipments to Brazil, India and elsewhere will support Russian exports.
5. Jordan
Mine production: 9.2 million MT
Jordan’s phosphate-mining output rose marginally by 260,000 MT to reach 9.2 million MT in 2021. Its phosphate reserves stand at an estimated 1 billion MT. The country’s sole state-owned phosphate producer is Jordan Phosphate Mines Company, which has offtake deals with several Indian firms. Another Jordan-focused producer is Arab Potash Company, a privately owned company in which China’s State Development & Investment Corporation holds a stake.
6. Saudi Arabia
Mine production: 8.5 million MT
Saudi Arabia produced 8.5 million MT of phosphate last year, up by 500,000 MT over 2020’s output. The country is sitting on 1.4 billion MT of phosphate reserves.
The Saudi Arabian Mining Company, also known as Ma’aden, operates the largest phosphate-mining facility in the world. The Wa’ad Al Shamal Minerals Industrial City, an integrated phosphate fertilizer production complex, is a US$8 billion joint venture investment between Ma’aden (60 percent), chemical manufacturer SABIC (TADAWUL:2010) (15 percent) and the Mosaic Company (NYSE:MOS) (25 percent), the largest potash and phosphate producer in the US.
The company has been working with Fluor (NYSE:FLR) on the Waad al-Shamal facility, with Fluor providing project management consulting to further develop the operation.
7. Brazil
Mine production: 5.5 million MT
Brazil, another of the top phosphate countries by production, produced 5.5 million MT of phosphate in 2021 compared to 6 million MT in 2020. Brazil has a booming agricultural sector and is the fifth largest fertilizer consumer; demand in the country is expected to grow twice as fast as the rest of the world from now until 2025.
Vale (NYSE:VALE) is the country’s largest producer of phosphate and nitrogen. It also operates Brazil’s only potash mine.
8. Egypt
Mine production: 5 million MT
Egypt’s phosphate-mining production in 2021 remained unchanged from 2020 output levels. According to the US Geological Survey, Egypt’s phosphate reserves now sit at 2.8 billion MT. More of those reserves may get dug up in the future as the country builds a new phosphate industrial zone in Aswan. It will also expand the Safaga Port.
9. Vietnam
Mine production: 4.7 million MT
Vietnam produced 4.7 million MT of phosphate in 2020, and the Southeast Asian nation has 30 million MT of phosphate reserves. The environmental impact of mining has been an ongoing issue in the Vietnamese mining industry, with concerns over coal and bauxite dominating the discussion.
10. Tunisia
Mine production: 3.2 million MT
Tunisia is last on the list of top phosphate-producing countries in 2021, with output 3.2 million MT, on par with the previous year. The phosphate industry is a critical component of the North African nation’s economy; however, in recent years, strikes and protests have curtailed phosphate production at a key operation in the country.
The Tunisian government is looking to double the country’s phosphate production by 2024 in an effort to boost its economy. “We are offering partnerships on phosphates with neighboring countries,” said Mining and Energy Minister Neila Nouira Gongi.
What are phosphates?
Phosphates are compounds that usually include phosphorous and oxygen, and can have one or more common elements, such as sodium, calcium, potassium and aluminum.
Where are phosphate compounds found?
Phosphate is mostly found in phosphate rock, a non-detrital sedimentary rock that contains high amounts of phosphate minerals. Phosphate rock can come in different forms such as quartz, calcite, dolomite, apatite, iron oxide minerals and clay minerals.
Is phosphate the same as phosphorus in fertilizer?
Phosphate is the natural source of phosphorous, which provides essential nutrients for plant growth and development.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
