Supply Shortages Continue to Plague Our Industry
As we near the mid-point in the year, our industry woes continue to persist in terms of supply shortages. Raw materials for fertilizer have seen unprecedented supply shortages and/or delays with corresponding historically high pricing. Additionally, certain active technical components for fertilizer combination products have unexpectedly become limited. Here’s a quick recap on where we are.
Mini Sulfate of Potash
The availability of mini-sized SOP continues to be scarce, and the current pricing remains about 65% higher than last year because of it. Our T&O industry is one of the primary users of this specific particle size of SOP, which has seen increased levels of limited supply due to a shift in manufacturing trying to keep pace with the demand for the larger size particles. Even though mini-sized SOP garners a higher price point in the market, the manufacturing costs to produce it do not justify prioritizing it above standard size production. Simply speaking, the manufacturers can be more productive and efficient producing standard sized particles if the market demand remains at unusually high levels. Once the market demand for standard size particle subsides, mini-sized SOP will become more readily available.
MOP
Muriate of potash has shown very little signs of market relief, currently still being priced at almost 150% higher than last year due to world supply shortages. The current conflict in Ukraine remains to be the most prevalent factor contributing to the world’s shortage. Combined, Russia and Belarus had previously contributed about 40% of the world’s exports of potash, but Russia was hit with crippling sanctions that have all but ceased their exports and Belarus’ largest producer issued a statement in February that said it wouldn’t be able to uphold their contracts due to forces beyond their control.
Imidacloprid + Lambda Cyhalothrin
It’s been widely reported that multiple suppliers of this insecticide combination tech no longer have any available. As we enter prime insecticide season, this development is troubling for the market. We anticipate as this shortage becomes more well known, there will likely be increased inquiries for custom products from customers who are looking for alternative manufacturers. Currently, we are well positioned with our supply of this tech and can fully service our current customers with established products that we have previously produced. Additionally, we also have some surplus tech available that would allow us to entertain new custom product opportunities. Any potential new opportunities will be prioritized on a first come, first served basis.
Limestone
Finally, one area of growing concern is the calcite limestone used as filler material in blended products. Supply limitations have steadily risen over the past 12 months forcing fertilizer manufacturers to expand their supplier base of limestone. The downside of this action is an increase in the variability of the limestone from one supplier to another depending on the quarry. Since each limestone supplier mine the calcite aggregate from different geographic regions, many aspects of the physical particle will likely differ in color and texture. These inconsistencies mean that the same specified products can see a range of limestone colors from white to light and darker gray color and to light brown from bag to bag, depending on what limestone source was used during different production times. Additionally, the limestone may also have different textures ranging from shiny to quite dull. These differences in appearances can potentially lead end users to incorrectly believe that there are problems with the products when, in fact, there is not. Unfortunately, until the supply of limestone returns to previous levels, this is the world that we all must learn to operate in.
Supply shortages, in general, are a normal part of any manufacturing business. There are always safeguards in place to help mitigate availability issues when they occur. The difference with this year is that the overall supply of multiple raw materials is significantly less than usual; meaning that even safeguard suppliers cannot solve the problem. The purchasing departments of all manufacturers are working harder than ever to keep the factory wheels churning along to avoid any disruption to servicing all of our customers.