In response to soaring domestic prices, China has instructed certain fertilizer producers to suspend urea exports, a measure expected to constrict supplies and elevate costs for farmers in crucial markets such as India.
Several major Chinese fertilizer producers have ceased entering into new export agreements since early this month, in accordance with a government directive, insiders revealed. It’s worth noting that, as they are not authorized to address the media, their identities must remain confidential. As of now, this restriction is exclusively applicable to urea.
Urea futures, traded on the Zhengzhou Commodity Exchange, exhibited a remarkable surge of nearly 50% over a seven-week span, spanning from mid-June to late July. However, prices have displayed fluctuations since that period and are presently approximately 11% lower this week.
China holds the distinction of being the world’s leading producer and consumer of urea. Any substantial reduction in exports poses a potential threat to tightening supplies and propelling global prices upwards. Among the primary export destinations for this essential crop nutrient are India, South Korea, Myanmar, and Australia.
As of the time of reporting, the Chinese Ministry of Commerce and the National Development and Reform Commission had not responded to faxed inquiries seeking comments on this development.
One manufacturer has already publicized its intention to curtail fertilizer exports. CNAMPGC Holding Co. recently announced its plans to limit shipments in order to safeguard supplies and maintain price stability.
These restrictions introduce an additional layer of volatility to the worldwide agricultural market, which has been grappling with the repercussions of extreme weather conditions in various cultivation regions, export limitations imposed by India, and Russia’s ongoing conflict in Ukraine.