Friday’s Insider: How Trump’s return could shake up the fertilizer market

With Trump back in the White House, it’s time to look at how his style of leadership could stir up the global fertilizer game.

Known for his no-holds-barred trade moves, pro-energy stance, and eagerness to roll back regulations, Trump’s win could bring a lot of change — and possibly some chaos — to the industry. Let’s break down what might be coming:

Trade Policies: Tariffs and Tensions

We know Trump isn’t shy about tariffs, especially on big players like China. If he brings back those import tariffs, fertilizer prices could feel the heat, especially since a lot of raw materials come from outside the U.S.

• For EU Farmers: Tariffs on fertilizer imports mean higher costs to get their hands on key materials. This could pinch EU farmers as they face rising input prices.
• Global Shake-Up: If the U.S. starts charging extra for imports, other countries might look for more trade deals with top fertilizer suppliers like Russia, Persian Gulf countries, and others. This would reshuffle trade routes and possibly bring more unpredictability to the market.

Energy Policy: Cheaper Gas, Cheaper Fertilizer

Trump has always backed fossil fuels, and if he boosts natural gas production in the U.S., domestic energy prices could fall. That’s great news for fertilizer manufacturers, who rely heavily on gas.

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• Boost for American Producers: Cheaper gas means U.S. fertilizer companies could cut down on costs, making them more competitive globally.
• Impact on Prices: If the U.S. ramps up fertilizer production, it could increase supply worldwide and push prices down. This could be a headache for companies in countries with higher energy costs who might struggle to keep up.

Deregulation: Environmental Standards on the Back Burner?

Trump’s approach to the environment has usually been, well, less strict. If he pushes for more relaxed regulations, U.S. farmers could see fewer restrictions on fertilizer use, particularly around nitrogen runoff.

• In the U.S.: With looser rules, American farmers could boost fertilizer usage, driving up short-term demand. But, of course, this comes with possible environmental downsides, especially around water quality.
• Ripples Abroad: Other countries might feel pressured to ease their own restrictions to stay competitive. If this trend takes hold, fertilizer demand globally could rise, possibly changing how fertilizer is used across different regions.

Geopolitical Tensions: More Sanctions and Trade Drama?

Trump’s assertive foreign policy could stir up tensions with heavyweights like China and Russia. Since both are crucial in the fertilizer world (Russia as a producer and China as a major buyer and seller), this could mean big supply chain headaches.

• Supply Chain Disruptions: Any new sanctions or trade spats could affect fertilizer availability, especially if Russian exports get restricted or if China decides to limit its own exports.
• New Alliances: Countries dependent on U.S. fertilizers might start looking elsewhere to avoid potential trade shocks. This could reshape who’s trading with whom in the long run.

Currency Shifts: A Stronger Dollar and Investment Moves

Trump’s “America First” attitude could make the U.S. dollar stronger. A strong dollar generally means that U.S. exports are more expensive for other countries, which could impact how attractive American fertilizers are on the global stage.

• Price Impact: If the dollar rises, U.S. fertilizers might become pricier for international buyers, reducing demand. But if the dollar weakens, U.S. fertilizers could become a hotter item globally.
• Investment Sentiment: Investors might be a bit wary and could start looking at more stable sectors. If this means less investment in fertilizer production, we might see price swings and possibly some market instability over the long haul.

Trump’s policies could set off a rollercoaster of changes in the fertilizer industry. Sure, the U.S. might become a stronger competitor, but we’re likely to see trade tensions, environmental shifts, and pricing pressures along the way. Fertiliser traders and companies will need to stay nimble, as global markets realign and adapt to Trump’s approach. The next few years promise a mix of fresh opportunities, new risks, and plenty of twists and turns.

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About the Author of “Friday’s Insider”: Ilya Motorygin is the co-founder of GG-Trading and brings 30 years of experience to the fertilizer industry. Renowned for his comprehensive problem-solving skills, Ilya expertly manages deals from inception to completion, overseeing aspects such as financing, supply chains, and logistics.