Phosphate prices to remain strong as Mosaic wins case


Company’s countervailing duty victory against miners in Morocco and Russia is one factor pointing to stronger prices

Mosaic has won its countervailing duty case against competing phosphate producers in Morocco and Russia.

The U.S. International Trade Commission ruled in favour of upholding duties imposed against those producers in February by the U.S. Department of Commerce.

The countervailing duties are 20 percent for Moroccan producer OCP, nine percent for Russia’s PhosAgro, 47 percent for Russia’s EuroChem and 17 percent for all other Russian producers.

The duties will remain in place for at least five years.

“Today’s decision upholds our belief that fair trade is a cornerstone of a healthy U.S. economy, and that American farmers will benefit from having a more competitive American fertilizer industry,” Mosaic president Joc O’Rourke said in a news release.

Josh Linville, director of fertilizer at StoneX Financial, said the ruling will keep North American phosphate prices at a premium to the world market.

He said Canada may be able to circumvent the higher prices by importing product through its west coast ports or by figuring out a way to ship imported product north from the Gulf of Mexico while somehow bypassing the U.S. duties.

CropLife, a news publication for agriculture retailers, is forecasting continued strong phosphate prices in 2021, particularly in the first half of the year.

“It is expected that the tight market conditions present in the latter half of 2020 will persist in 2021,” stated the publication in a recent market outlook it published.

New Orleans barge diammonium phosphate (DAP) prices finished 2020 at US$395 per ton, a $160 per ton increase from the start of the year. That offset the $150 per ton decline that occurred in 2019.

Prices shot up in late June 2020 when Mosaic filed its countervailing duty petition. That caused Russian and Moroccan suppliers to exit the U.S. market, resulting in a supply shortfall.

North American phosphate prices went from trading at a $40 per ton discount to international prices at the end of 2019 to selling for a substantial premium by the end of 2020.

Other contributing factors to the 2020 price hike included voluntary curtailments due to COVID-19, lower Chinese exports and a delay in the opening of new facilities in Morocco and Saudi Arabia, said CropLife.

“Combined, we estimate that the above issues reduced global phosphate fertilizer availability by circa 2.5 million tons. At the same time, global shipments are estimated to have risen by roughly one million tons,” stated the CropLife article.

Global shipments of the product are expected to climb another 1.5 to two million tons in 2021 while supplies will struggle to keep pace, said the publication.

Linville agrees that the phosphate balance sheet is going to remain tight, especially in the North American market due to the lack of imports. China also faces a 25 percent duty in the U.S. market.

U.S. stockpiles of the fertilizer ingredient are severely depleted.

“We’ve had a decent little chunk of imports in February and March but it’s not enough to make up what we lost. We are tight,” he said.

“That is why we have seen such a robust price increase.”

DAP prices in New Orleans are up 53 percent since Nov. 1.

He agrees that the price outlook for the fertilizer ingredient remains firm unless there is some sort of spring weather problem.

CropLife is forecasting strong spring phosphate demand because it is still an affordable crop input due to strong crop prices.