FAO’s global food price index soared to an all-time high this March, driven up by the Russian invasion of Ukraine and rallying fertilizer prices.
UREA prices hit a record high of over $900/ton this March amidst the ongoing gas price rally.
Globally, urea is by far the most used fertiliser, accounting for around one-third of global fertilizer supply.
Natural gas accounts for about 70-80% of urea’s production costs, and as such gas and urea prices show a relatively strong correlation (0.75 through the last three decades).
Russia’s ban on fertilizer exports this March is putting further pressure on prices, with the country accounting for ~15% of global exports in nitrogenous fertilizers.
And of course, Russia’s invasion of Ukraine is having devastating effects also on agriculture and food supply security.
Ukraine could lose half of its harvest due to war, which will have rippling effects across the global food value chain, considering Ukraine’s central role in corn, what, sunflower and other cereals.
What is your view? Will we see the current gas crisis transform itself into a food crisis? What are the policies to mitigate?
Source: Greg Molnar (LinkedIn)