Global fertilizer supply is tightening, and Russia plans to implement quota management for fertilizer exports.

　　Due to soaring natural gas prices pushing up production costs, some fertilizer producers have been forced to cut production, and the global fertilizer supply is gradually tightening. In order to ensure domestic supply, Russian Prime Minister Mikhail Mishustin said on Wednesday that Russia plans to implement a six-month export quota restriction on nitrogen fertilizers and compound fertilizers.

　　Earlier, the energy crisis led to a surge in nitrogen fertilizer prices. Nitrogen fertilizers can be used for a variety of crops such as corn and wheat, while natural gas accounts for 75% to 90% of the operating cost of nitrogen production. With the rise in natural gas prices, the fertilizer industry's profits have been squeezed, leading to tight supply.

　　Due to rising planting costs, this may curb global crop harvests in the coming year and accelerate food inflation.

　　Russian Prime Minister Mishustin announced at a government meeting on Wednesday that the government plans to limit nitrogen fertilizer exports to 5.9 million tons and nitrogen-containing compound fertilizer exports to 5.35 million tons, with quotas implemented for six months. The quotas will reportedly be implemented from December 1, 2021 to June 1, 2022.

　　Earlier, Russian President Putin urged the government to take measures to ensure fertilizer supplies for local farmers. The quota on fertilizer exports is a new measure by the country to control local food prices, following Russia's announcement of an increase in export taxes on wheat.

　　Elena Sakhnova, an analyst at VTB Capital, said that these quotas may not have much impact on Russian fertilizer exports, as the quota limits are roughly the annual export volume of Russian fertilizers.

　　Maxim Kuznetsov, executive director of the Russian Association of Fertilizer Producers, said that although the government has adjusted the sales share between the domestic and foreign markets, this will not affect production.

　　Concerns about Fertilizer Supply

　　European farmers are very concerned about the fertilizer supply for next spring. The French agricultural organization said that the Price of nitrogen fertilizer has tripled last month, and there is a risk of shortage.

　　“Russia's export quotas will further tighten the globally sought-after (fertilizer) market,” said Alexis Maxwell, an analyst at Green Markets.

　　Green Markets data shows that last month, the North American fertilizer Price index hit a record high, and the Price of ammonia fertilizer in Western Europe also reached its highest level in more than a decade.

　　Unlike fertilizer producers in other parts of the world, Russian fertilizer producers happen to benefit from the energy crisis because the Price of natural gas in Russia is fixed.

　　Although farmers have already purchased some crop nutrients for winter sowing, nitrogen fertilizer (the main fertilizer for spring sowing) is an explosive hazardous material, and large quantities of storage may be very dangerous.