From trade regulation bureaucrats to swashbucklers, the factitums of President Trump have taken on the phosphate fertilizer prices motivated by a frenzied need to placate angry farmers: a key MAGA-voting constituency for Republicans. Many of the U.S. farming communities are composed of MAGA folks themselves, but certainly not all of them are MAGA or die-hard Trump voters. The fight for fertilizer access and supply is a bi-partisan issue going into the U.S. midterm elections this year.
Hence, the Trump Administration has seized the initiative of a new fertilizer plant investment to make a difference before mid-terms. Too little too late.
This is a rare carpe diem moment for U.S. fertilizer demand at the wrong time—not because of seasonal demand—but because of the present supply and demand cycle for phosphate fertilizers globally. We certainly do not hear the DC swashbucklers talking about Chinese-made phosphoric acid (PPA), although the sulfur panic remains at large and has been blamed squarely on China instead of the Iran war.
Now, if we shift to the fertilizer politics between China and India, that is possibly where the failure lies in this strategy to secure phosphate supplies for U.S. farmers anyways. India is the one demand pillar holding the global fertilizer market together. For example, fertilizer imports in India were a combined 230,000 tons of DAP in the beginning of September. This includes all top origins from the U.S., Russia, Saudi Arabia and Morocco. The real fertilizer price influencer for phosphate is India, not China.
Everyone knows that we’ve been critical of Morocco’s phosphate exports to the U.S. market in the Growth Minerals Review. The news about the potentially new investment from CHS and OCP Group North America doesn’t change our minds at all. All humbugging over the West (Moroccan) Sahara dispute aside, one of the underlying economic factors for phosphate fertilizer production is obviously sulfuric acid supply, but so will be the phosphate rock and concentrates being produced in Morocco and the rest of the world. There isn’t any real transparency “on the ground”, or rather in the ground, when it comes to OCP Group’s strategy to enhance its position on the global phosphate market in the future.
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