Fertilizer Shock: Why Farmers Are Getting Crushed First

Summary

Fertilizer analyst Josh Linville debunks global famine fears, explains that farmers are bearing the cost of higher fertilizer prices while grain markets lag. He highlights supply disruptions from the Strait of Hormuz, China's export restrictions, and the Russia-Ukraine pipeline loss, and notes that protectionism is rising. He concludes that the fertilizer sector is not an attractive investment despite high margins.

• No global famine has occurred despite multiple supply disruptions.
• Farmers are absorbing higher fertilizer costs; grain prices have not risen proportionally.
• China's export restrictions on phosphate and urea are a major, underappreciated factor.
• The Russia-Ukraine pipeline for ammonia exports has been shut, removing a key supply.
• Protectionist measures are emerging in Egypt, Australia, and the US.
• New fertilizer production capacity is unlikely without government intervention.
• Fertilizer companies like CF, Nutrien, and Mosaic have strong margins but are not recommended as long-term investments.