Friday, January 21, 2022

Agri Econ 36, High beef, wheat, coffee, ammonia and fertilizer prices

Beef prices now at all-time high. Wheat also at 9-years high, and coffee at 10+ years high.

Consider ammonia, a key ingredient of fertilizer. Natural gas is needed to produce ammonia and energy from fossil fuels to mine phosphate. Ammonia + phosphate are needed to make fertilizer, which is needed for mass food production. 

Global ammonia prices surge on European natural gas cost push
Author Vipul Garg 
Editor James Leech 
16 December 2021

European ammonia prices highest globally, at $1,120/mt
Middle East prices up 90.48% since Oct. 12, fastest among all regions
The rise in European ammonia prices can mainly be attributed to the rise in natural gas prices since the summer months, with for instance the Dutch TTF day-ahead prices closing on Dec. 15 at $42.91/MMBtu, an all-time high.
"European ammonia plants are being shut down with the feedstock (natural gas) prices rising due to lower supply from Russia and the Nord Stream 2 pipeline situation still unclear," one buyer in Asia said.

My farmer godson in Pangasinan told me these prices last week:
Urea (46-0-0) price P950/bag around March-May 2020, this January 2022 P2,600. 
Triple 14 NPK (ie, 14-14-14) from P850/bag last year now P2,500. 
Sulfate formerly PP580/bag now P1,400.

One clear result of tripling of fertilizer prices -- less farmers planting rice for 3rd crop, or those who plant corn as 3rd crop dry months not doing it. And diesel for tractors, harvesters, water pumps, etc. been rising, so farm operating cost also rises.

We expect more food inflation in the coming months.
Fossil fuel prices should decline. Humanity needs more fossil fuels for mass food production, have food security with stable and affordable prices.

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