The Country 20/05/26: Vitor Cacula Pistoia talks to Jamie Mackay

RaboResearch senior analyst covers the latest developments in global fertiliser markets, where farmers are paying the price, big time, for the blockade in the Strait of Hormuz.

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Episode Transcript

Speaker 1 (00:00):
Well, we all know about the fuel crisis as a
result of the Middle East crisis and the blockade and
the strait of Her moves, But for farmers it is
so much more. It's not only a fuel crisis, it's
also a fertilizer crisis. To tell us more about it,
I've gone right to the top Rabobanks expert in the
field when it comes to fertilizer. His name is Vitor Pastoia.

(00:23):
He's based out of Australia. He's the fertilizer guy. We're
not going to see a drop in fertilizer prices, Vitor
for quite a while, am I or am I just
being too pessimistic there?

Speaker 2 (00:34):
You're about right, Jamie. The fundamentals in the fourtizer market
do remain the same. That is the strait of Her moves.
It's technically shut and we are not getting the goods
that we used to get from the region. Just for
the moment where we are, like late May, we have
a temporary depth in neithersent crisis because there is a
lack of demand. The big buyers in the South America,

(00:56):
they are not active assistance, therefore crisis dropping. But as
soon as those big farming countries enter the goloble market,
we are likely to see sustained prices for nitrogen, and
on the phosphate throat, unfortunately, no good news because it's
all about sulfur.

Speaker 1 (01:14):
Yes, well, sulfur. Fifty percent of the world sulfur has
to go through the strait of hormones. When we look
at the old NPK nitrogen, phosphate, potassium, and of course
we can add sulfur in there. So in terms of
the amount of disruption this Middle East war is causing
to nitrogen, what is it about thirty thirty five percent
of the nitrogen has to travel through that straight.

Speaker 2 (01:37):
Yes, that's about right, low thirties percent for all nitrien
fertilizers like ten to fifteen depending of high Look the
number four for phosphate, but then fal sulfur is more
than half. And just a quick recap here. To have
a phosphate fertilizer, you need your phosphate rock, but also
you'll need sulfur to produce sulphuric acid. Because those phosphate

(01:58):
rocks that we mind around WAW they have low concentration
like three four five percent of profits and the minerals
that we like to use and our props and pastures,
they are much higher than that. So we need to
get the soufiity today to get rid of all the
other things that we don't want. So that is the
key issue. Because of HomeOS shot, we basically lose round

(02:18):
number fifty percent of global so forth and not only
fertilizers that use so for all the mining guys, not all,
but a big chunk of them, sorry, a big chunk
of the mining guys and industries they rely on sofa
as well, So there's plenty of competitions for that product.

Speaker 1 (02:33):
So if this war, and everyone says this, if it
was two end tomorrow, a flow on effects are going
to take a long time to come through the system.
So effectively, if you're a farmer listening to this, feel
you're listening and you're thinking of your farming season coming up.
Here in New Zealand, we're very much not putting on
fertilizer now until the early spring. So you need to

(02:54):
budget for increased elevated prices. Do you need to do
it for the entire next farming.

Speaker 2 (03:01):
I think so. Unfortunately, that is a good assumption for
the base case, because it's unlikely that war will be
solved today. But even if that happens, it will take
a lot of time to reorganize the supply chains. We
have problems with storage, we have problems with vessel availability,

(03:22):
we have problems with end user stocks that are going down.
So basically, the twenty twenty six calendar years, if we'll
experience in the full effect, are almost the full effect
of this disruption on the fourth wider front, on the
fuel front as well. So yes, budgeting for our worst
case scenario. It's a good call.

Speaker 1 (03:42):
Here, budget for worst guyset scenario. I hope for the
best of ATel Pastoia out of Rabobanks Australian officers. Thanks
for some of your time tonight to talk about a
first

Speaker 2 (03:52):
Thank you, Jamie,