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The Saskatchewan Roughriders beat the B.C. Lions 39-8 on Saturday night.
Shaun Haney, founder of RealAgriculture, hosts Real Ag on the Weekends on Saturday afternoons from 4 p.m. to 5 p.m. and Sundays from 11 a.m. to 12 p.m on 980 CJME and 650 CKOM.
On Saturday he spoke to Josh Linville, vice president of fertilizer for StoneX Financial Inc. about the impact Hurricane Milton has on phosphate production.
Sean: There’s a lot of phosphate production in the Tampa Bay region, and we’re already hearing about retailers telling farmers there could be some disruption in supply. What are some of the impacts for farmers?
Linville: We have already seen a phosphate market that’s been incredibly high. The retailer has been feeling that, and the farmer economics have been tough, so everything has slowed way down all this year, and everybody’s been taking a much more conservative approach. That means less tons that are in place ready to roll.
Now, we have these issues like hurricanes coming through that are reducing supply and production — and doing it just before the start of fall application season just made a bad situation worse.
Sean: What do farmers need to be watching out for, from a fertilizer perspective?
Linville: When they were built, these facilities employed very good engineers who obviously aren’t dumb. They realized they were building something in the state of Florida, which has these major storms that come across, so it is not uncommon for them to kind of build these facilities to withstand those storms.
So from that perspective, we’re not expecting major impacts to the facilities themselves. There’s probably some damage, maybe some water damage, but for the most part, the facilities probably rode out the storm very well — but that’s the part they can control.
What I’m more concerned with is how long is their water out? How long is their electricity out? And, much more importantly, the workers at those facilities and should they be caring about their family and their friends right now before going back to work?
Really what it comes down to is how long will the cleanup take and when will things return to normal because that’s going to dictate when those workers can get back to work and start producing again.
You may have a facility that’s perfectly fine, but if your workers are busy cleaning up for two weeks, you’ve lost two weeks.
Sean: How much of the phosphate supply is coming through this region?
Linville: If you look at the facilities that are right outside Tampa, 62 per cent of all North American phosphate production is in the state of Florida. Now, there are some plants that were outside the kind of the scope of this hurricane, but the majority of them are right there. So it’s a it’s a big, big chunk.
Sean: Why is this a tough issue for farmers to steer through? Are there characters who are trying to leverage this situation and steamroll farmers into making a purchase?
Linville: That’s been the problem we’ve had all year so far, when we look at farm economics — they’ve already been very tough. It has improved a little bit — we’re hearing about better yields with wheat, more bushels to market, and grain prices have come off their lows. They’re not great, but they’re better than what they were.
But when you look at phosphate, it is just so high priced versus every point of view that we look at it, you’re right. Farmers have been saying ‘I don’t want to do it’ and now you have a situation like this where people are going to pull some emotional strings to try and get you to do something.
Farmers should go back and talk to their trusted partners, and the supplier that generally steers you correctly, they’re going to be able to tell you either we’ve been buying we’re ready to go, or, we’ve been a little behind the eight ball and conservative ourselves, so we need to have a talk about what you need so we can try and get ahead of it as best we can.
Sean: Outside of the hurricane, why is phosphate so high priced?
Linville: It’s a global issue. Historically speaking, China is the largest provider of ammonium phosphate fertilisers (MAP and DAP) to the world. For the last several years we’ve seen them taking much more nationalistic, protective point of view, and that means lower exports. So one of your biggest exporters is scaling back, and that’s reducing global supplies.
India is the world’s biggest buyer of phosphate, not the biggest consumer, but the biggest buyer. Their stockpiles got dangerously low this summer, and the government had to increase their subsidy rate to allow the importers to start working. So now your biggest buyer is using government money to rebuild stockpiles.
Supply has been way down, demand has been way up, and that has allowed prices to stay where they’re at.
Sean: What’s going on the nitrogen market?
Linville: That’s been up as well and again, it goes back to the supply situation.
Prices starting to spike late or early last week, and it really gelled around the Iranian attack on Israel, and everybody tied it to that situation, saying prices are up because of Iran-Israeland U.S. pushback was the trigger that allowed prices to go up.
But that wasn’t the cause of it. We’ve been dealing with, again, China typically exports five and a half million ton per year. Through August China had exported 245,000 ton. In the EU region, production is still 75 per cent of normal — they’re producing 15 million ton a year and that’s a three and a half million ton shortfall. Brazil remains offline. Egypt has been having some hiccups that should be behind them now, but this it equates to millions upon millions of tons that are missing.
Without demand, the market hasn’t really done anything. But then the Iran-Israel situation was the trigger, where everybody said, ‘we’ve been saying prices need to be up’. So values are up, and that’s it’s also starting to affect anhydrous.
Sean: Why haven’t higher prices led to manufacturers bumping up production?
Linville: The production facilities that are online are maxed out, and already producing everything they possibly can. And the issue is that even though they’re maxed out, the amount of supply that is lost is greater than the demand. We do see values going up. You can always get what you want for a price and a timeline, and that’s kind of the situation we’re getting into now.
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