Growers face all kinds of uncertainty heading into seeding, but tight global inventories, production issues are supportive
REGINA — A market analyst is forecasting average margins for western Canadian growers this year.
Mark Tully, Nutrien’s senior market researcher, said global grain fundamentals are supportive because of tight non-North American inventories and production issues.
However, the large 2024 North American crop and uncertainties in the trade landscape point to a return to average after the highs of the COVID years.
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Tully told a CropWeek 2025 audience that macroeconomic uncertainty is growing.
New leaders and policies, the U.S. tariff threat and other issues are factors.
Conflicts around the world are driving short and medium impacts to supply chains and commodity price volatility, he said.
He spoke last week prior to the inauguration of president-elect Donald Trump in the United States, and it wasn’t yet clear if and how his proposed tariffs would be imposed. However, Tully said it’s also worth watching the U.S. trade dynamics with China.
China is back in the crop protection market in a big way, he said.
The country’s zero growth policy between 2014-20 resulted in limited production of active ingredients, and some producers closed.
“In 2024, we saw a massive boom in their total production as well as growth in expansion capacity that’s expected over the next several years for key active ingredients as well,” Tully said.
Glyphosate prices are below the 10-year average and expected to remain stable this year.
Overall, input costs are coming down after extreme inflation through 2022, 2023 and parts of last year, driven by that lack of Chinese ingredients.
On fertilizer, Tully said he expects average to favourable economics when considering application relative to farmer returns.
Fertilizer shipments have moved upward the last few years.
“Stable acreage projections for the next year means relatively stable demand with the potential for some growth depending on supply, particularly for phosphate,” he said.
Potash is trading well below 10-year average levels, while nitrogen is trading at historical averages.
Meanwhile phosphate is well above that 10-year level and driving uncertainty.
Nitrogen production relies on the energy market, which has been volatile in both supply and price, Tully said.
High energy prices forced Europe to mothball capacity, and Tully said 20 to 25 percent remains offline today. Russia was the world’s largest exporter but also pulled back on ammonia exports.
Egypt, Iran and some northern African producers all rely on energy imports to produce nitrogen and have had to reduce their available exports due to supply challenges.
Tully said there will be continued volatility in this market, although Russia should resume some exports this year.
Chinese domestic policy is also driving nitrogen volatility.
The government there has renewed its focus on domestic production and food security, which means more use of chemicals and fertilizers.
China is historically a urea exporter but last year shipped none. That in turn affected India, which relies on Chinese exports.
“Right now we’re seeing India pretty aggressive in the marketplace trying to get another 1.5 million tonnes here before March,” Tully said.
This is happening at the same time as Europe and North America are also looking for urea. He said China likely won’t export any urea until the second quarter of 2025, and that could result in tightness in North America.
The U.S. also requires urea imports, along with ammonia and UAN, to meet its demand, but hasn’t imported enough ahead of the coming growing season. Tight inventory there should drive demand in the first quarter, particularly with expanding corn acreage.
In the phosphate market, China is the world’s largest exporter but has pulled back by four to five million tonnes.
Morocco is starting to overtake China in exports, but its production isn’t enough to balance the global marketplace, said Tully.
The U.S. is also short about 500,000 tonnes because of hurricane impacts, and that supply is likely to be available in the first quarter. Brazil and India are also short.
Most sulfur used by Saskatchewan farmers comes from ammonium sulfate, Tully added.
“We’re in a supply constrained market. About 17 percent last year of U.S. demand was met by Canadian production of ammonium sulfate,” he said.
U.S. production has declined, so supply is tight.
