High feedstock cost pushes Urea Demand to reach a sky-high Value in the USA

Urea prices in the United States are rising, fuelled by high costs of raw material Ammonia and low Phosphate stockpiles. Seasonal hurricanes caused production interruptions in the United States, which has further constrained the market supply and therefore, prices are on the rise. Natural gas is the primary component of most Nitrogen-based fertilizers, therefore, surging prices of Natural gas are directly impacting prices of fertilizers including Urea. Phosphate rock prices are likewise at historic highs, maintaining a general upward trend in market prices.

Urea FOB Cornbelt prices have been settled around USD 738 per MT this week. Agriculture production costs in the United States are becoming increasingly crucial for American farms' short- and long-term viability. Although the United States is the world's third-largest fertilizer producer, it still needs to import all three nutrients, particularly nitrogen and potash, to meet demand. This means that US fertilizer dealers and producers must pay the global market price for fertilizer and fertilizer supplies, plus transportation costs.

Even in the last weeks of December, several US farms are suffering from a scarcity of Urea based fertilizers. Numerous fertilizer products (such as ammonia, DAP, and Urea) have seen considerable price increases in recent weeks as a result of the drought.

As per chemAnalyst ,“ Prices of Urea are predicted to continue high until the first quarter of 2022. Due to a scarcity of raw materials, some farmers may adjust their preferences to less fertilizer-intensive crops, while others may reduce their overall fertiliser consumption. Tight Ammonia supplies will continue to harm US Ammonia companies' profitability through Q1 2022. Higher feedstock prices and strong export demand are driving the upward price expectation, as China, the world's largest producer, has stopped all exports until June 2022, forcing key importers to seek alternative suppliers.”