China’s export controls drive up global fertilizer prices

Fertilizer prices are rising again amid geopolitical tensions involving major producers China and Russia, with Beijing’s export restrictions worsening supply constraints — a scenario that could further drive up global food prices.

International prices for diammonium phosphate (DAP), a nitrogen- and phosphate-based fertilizer, reached a three-year high of USD 795 per tonne in August before easing slightly to USD 780 in September, still 34% higher than at the start of the year.

The fertilizer market remains highly exposed to geopolitical risk. Prices surged after Russia’s invasion of Ukraine in 2022, as uncertainty over supplies from the world’s largest exporter disrupted global trade. The World Bank fertilizer price index nearly tripled to 293 in April 2022 (base 100 in 2010), later stabilizing between 110 and 120 in 2024, but it has been rising again since early 2025.

Although most commodity prices have fallen this year, fertilizers are moving in the opposite direction, said John Baffes, senior agriculture economist at the World Bank. He attributed the trend to stronger demand, export restrictions, and tariffs.

Production of fertilizers is heavily concentrated in a few countries. China accounts for 46% of global phosphate rock output, according to the U.S. Geological Survey (USGS), while China, Morocco, the U.S., and Russia together produce over 70% of the world’s supply. For potash, Canada is the top source, but Russia and Belarus, the second and third largest producers, account for one-third of global output — nearly half when combined with China.

In October, China suspended exports of urea and DAP. After nitrogen fertilizer exports had dropped more than 90% in 2024, supply was slowly recovering — until Beijing reimposed restrictions, shaking global markets much like its earlier controls on rare earth elements.

China “may be prioritizing domestic supply to boost agricultural production,” said Yukiko Nozaki, analyst at Mitsui & Co.’s Institute for Strategic Studies. The move is also viewed as a response to U.S. tariffs under President Donald Trump and broader U.S.-China geopolitical tensions.

China, the world’s largest soybean importer, stopped buying from the U.S. in September, though a deal reached during last week’s U.S.-China summit could reopen trade. Still, Beijing may divert fertilizer output toward domestic crop production.

According to the World Bank, China’s phosphate export cuts reflect “government restrictions aimed at keeping domestic prices low and ensuring availability of phosphates for lithium iron phosphate (LFP) batteries used in electric vehicles.”

The European Union added new sanctions against Russia and Belarus in July, introducing gradually rising tariffs on fertilizer imports through 2028. The EU aims to reduce dependence on Russian fertilizers, which account for 25% of its imports.

But alternative sources are limited. For potash, “few suppliers exist beyond Russia and Belarus,” said Baffes, warning that supply shifts would be costly and could further disturb the global balance between supply and demand.

The price surge and tighter supply will translate into higher food production costs. In the U.S., fertilizers represent 18% of soybean production costs and roughly 35% for wheat and corn, according to the U.S. Department of Agriculture. In developing countries, the impact is even more severe.

During the post-invasion price spike, farmers in South Asia and Africa reduced fertilizer use, leading to lower yields where no alternative methods were adopted. The International Fertilizer Association estimates that a 5% drop in nitrogen fertilizer use cuts wheat output by 3.1% and rice by 1.5%.

According to the World Bank, changes in fertilizer, energy prices, and interest rates take 12 to 16 months to fully impact international prices for wheat and corn.

Source: Valor Econômico

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