U.K. Fertilizer Shortages Loom as Importers Hold Off Purchases
(Bloomberg) -- High fertilizer prices are pushing U.K. importers to pause purchases, threatening supply shortages next spring as soaring gas costs continue to disrupt the sector.
Importers fear they may suffer losses if farmers hold back from buying or if prices suddenly drop, according to the Agricultural Industries Confederation. That’s compounding the logistical bottlenecks and higher freight costs plaguing the sector.
“As an importer you have to balance the risk of buying the fertilizer at global prices against the risk of being able to sell it when farmers are reluctant to buy,” said Jo Gilbertson, head of fertilizers at the confederation.
With gas prices hitting fresh records as Europe’s energy crisis deepens, fertilizer manufacturers may further curtail production. The region could face a fertilizer deficit next year equating to about half of the 18 million tons it usually consumes, said Gilbertson. Supplies have tightened after Russia imposed quotas to protect its domestic market.
Analysts have warned that higher fertilizer prices may cause demand destruction as farmers hold off from purchases and scale down application.
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