Supply Disruptions Impacting Ag Mkts, Nutrien Says — Commodity Comment

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By Stephen Nakrosis

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Ken Seitz, the interim president and chief executive of Nutrien Ltd., said Monday that global agriculture and crop input markets “are being impacted by a number of unprecedented supply disruptions that have contributed to higher commodity prices and escalated concerns for global food security.”

He also said Nutrien is “safely increasing potash production” and using its supply chain to provide customers with the crop and services. Nutrien expects to generate higher earnings and cash flows in 2022, he added.

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Agricultural Outlook

Nutrien’s management said the conflict in Ukraine “has led to further tightening of crop export supplies and heightened global food security concerns.”

Global grain and oilseed inventories were well below historical average levels entering 2022, and “the Russia and Ukraine conflict has led to further tightening of crop export supplies and heightened global food security concerns,” management said.

The USDA expects the combined planted acreage of US corn, soybeans and cotton could set a record in 2022, according to Nutrien.

Markets Outlook

Potash supplies are being impacted by sanctions placed on Russia and Belarus, two nations that account for about 40% of global potash production and exports, Nutrien’s management said.

This has led to reduction in management’s projected range of global potash shipments to between 60 million and 65 million tons in 2022.

Sanctions have also led to tighter global nitrogen supplies due to reduced availability from Russia. The supply is also impacted by China’s restrictions on urea exports, according to management.

Russian natural gas supply uncertainty contributed to very high and volatile natural gas prices in Europe, “which has led to reduced nitrogen operating rates in the region,” Nutrien’s management said.

Global phosphate supply was impacted by reduced DAP and MAP fertilizer exports from Russia and China.
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Phosphate markets “have been further supported by a significant increase in sulfur and ammonia costs,” the company’s management said.

Financial Guidance

Nutrien said it was raising full-year 2022 adjusted EBITDA and net earnings per share guidance, “primarily due to the expectation of higher realized selling prices, increased potash sales volumes and higher retail crop nutrients and crop protection products gross margins.”

The company raised potash sales volume guidance to between 14.5 million and 15.1 million tons in 2022. Nutrien also lowered nitrogen sales volume guidance to between 10.7 million and 11.1 million tons in 2022, reflecting “the impact of unplanned plant outages that occurred during the first quarter” of 2022.”

Write to Stephen Nakrosis at [email protected]

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