Decade-high prices and longer-than-usual delivery times have made it a very tough 12 months for both fertiliser importers and farmers.
While global urea (nitrogen) prices have at least started to show some reprieve in recent weeks - falling 40 per cent in US Dollar terms since their peak in late November - there is another storm threatening to strike, potentially pushing fertiliser prices north once again.
The concern about Russia invading Ukraine has been growing for some time.
While this may primarily lead to a large-scale humanitarian crisis, there is also the possibility of major shocks to agricultural markets - including fertilisers.
The first potential concern is a major interruption to global fertiliser supply and trade flows.
Russia alone is responsible for 46pc of global ammonium nitrate (also used for mining), 23pc of ammonia, 14pc of urea and 14pc of mono-ammonium phosphate (MAP) exports.
If we add Belarus to the equation, for potash (potassium), the global export share increases to a hefty 40pc.
While Australia imports little from Russia and Belarus - in 2020 it was only about 200,000 tonnes of urea from Russia and 80,000t of potash from Belarus - shifting trade flows may be a cause for concern for our importers.
Brazil is the country likely to be most heavily impacted if tighter sanctions are implemented on fertiliser exports from the region.
Brazil, which is the world's biggest importer of fertilisers, relies heavily on imports of urea, ammonium nitrate, MAP and muriate of potash (MOP) from the region.
If Brazil is forced to change the origin of its fertiliser imports, that may hold challenges for Australian imports - especially considering Australia's purchasing power is lower than that of Brazil.
The second way fertiliser prices may be impacted by this crisis is via the energy market.
Russia is a large supplier of natural gas, which is one of the key raw materials of urea, into Europe.
While gas prices have come off the highs we saw late last year due to a milder-than-normal winter in Europe and improved supply from Russia, further interruptions to EU gas supply would again send prices upwards and threaten the viability of nitrogen production.
So where does this leave Australian growers?
For the time being, as a result of this crisis, we see there is a risk of fertiliser prices rising higher than our current base case forecast, which is to see a slow easing of global urea prices until the middle of the year.
Due to procurement and ocean freight times, this may take three to four months to flow through to the local market.
For phosphate prices, the picture is not as nice.
We think it is unlikely that we will see any significant downside in phosphate prices until China re-enters the export market, which is expected to be at the end of the first half of 2022.
As for margins, escalation of tensions between Russia and Ukraine would also increase prices of grains and oilseeds, potentially limiting damage to margins to some degree.
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