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Potash prices are soaring in the markets due to robust global demand and reduced supply. The conflict between Russia and Ukraine risks fueling a new upward spiral for this mineral used as fertilizer for agriculture.
The price of potash fertilizers is close to its highest peak reached ten years ago in the United States and Brazil, two major importing countries. The main reason for this increase is explained by the economic sanctions imposed by Western countries against the repressive regime of the Belarusian president.
These sanctions are destabilizing global supply while demand remains strong. A country in Eastern Europe, Belarus is the world’s third largest producer of potash and accounts for 20% of world supplies. Its large Russian neighbor exports the same quantity.
In the event of a conflict between Russia and Ukraine, there is a high risk of supply disruptions on the markets because, here too, Western countries have promised sanctions against Moscow. Canada, the world’s largest producer, does not have the capacity to increase its supply enough to meet demand.
Canadian company Nutrien, one of the world’s largest suppliers of potash, recently said it could increase production by up to 29% in the coming years. In this context, the price is likely to rise further on the markets this year after having tripled in 2021. This is of particular concern to Brazil, which is one of the world’s largest importers – it imports 95% of its needs.
Last year, he bought 10 million tons of potash. The subject was even on the agenda of Brazilian President Bolsonaro’s visit to Moscow last week. Russian fertilizer producers reportedly promised to double deliveries to Brazilian farmers.
In the medium term, Brazil plans to produce potash locally. Amaggi, Brazil’s largest grain trader, is planning, with the support of a Canadian investor, to open a large potash mine in Latin America in the country, with a production capacity of 2.4 million tonnes per year.