Fertiliser prices tipped to jump as Middle East conflict threatens global supply

Fertiliser prices will rise due to the conflict. Photo / Dave Murdoch

By Sally Murphy of RNZ

Ravensdown says it has enough fertiliser in the country or on the way to cover autumn, so any price impacts due to the war in the Middle East won’t be felt immediately.

The Middle East is a significant player in the fertiliser trade, with about 40% of nitrogen fertilisers coming from the region.

It’s also a major producer of liquid natural gas, which is used to manufacture fertilisers.

Ravensdown chief operating officer Mike Whitty said fertiliser prices will rise due to the conflict, but by how much and for how long is not known.

“We saw last year in June, when there was conflict with Israel, the US and Iran, that prices for energy and nitrogen increased reasonably rapidly, by about 15%, but then they came down just as fast about two weeks later - so it really depends how long this conflict is going to continue for really.

“We are expecting a significant spike in prices, we are watching the price daily, and everyone is waiting to see what happens in the Strait because a lot of the world’s fertiliser trade travels through there.”

Whitty said farmers shouldn’t panic.

“The important thing is we have enough fertiliser in the country or on the water coming here to cover all our autumn needs, so it won’t be an issue until later in the year, but that’s only if the conflict continues.”

Another complicating factor in the fertiliser trade at the moment is that China, another major producer of nitrogen, is not exporting; every now and then, it stops sending product offshore in order to protect domestic supply.

Whitty said Ravensdown is well-versed in dealing with geo-politics and has solid relationships with suppliers.

He said there are other options to source nitrogen fertiliser if the Middle East war is prolonged, including Malaysia, Brunei, Indonesia and some countries in Africa.

- RNZ