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Comment by fullstop | Hacker News Reader

Has the USA's potash supply been reduced due to strained relations with Canada? They are our top supplier, by far.

Fertilizer is pretty fungible and is a global market, so even if the US is primarily supplied by Canada, and overall global demand remained constant, prices would go up since there will be supply reduction due to the Hormuz strait being closed.

Having the two major inputs turned off turns fungible to non-fungible

No, but it makes it pricier. In case you don't know:

"Fungible describes goods, assets, or commodities that are mutually interchangeable, meaning one unit is equivalent to another of the same type and value.

mind you, the hormuz fertilizer and the canadian fertilizer arent interchangeable.

they are two parts of a three part whole.

they arent perfectly fungible either - the core nitrogen, potassium, and phosphorus can come in many forms, and need some chemical processing to get into the right shape for use

"Fungible" here means "traded globally", as others have noted elsewhere in this thread.

Yes. Despite what others have said, yes. But, in general, because of the current global dynamics, fertilizer is more expensive wherever you're going to be getting it from. It just doesn't help that the US has picked a trade war with all allies at the same time, while also engaging in real wars that disrupt global supply chains of critical resources.

It shocks me when I realize it's only been 16/48 of his term. We still have 2/3rds to go.

Yes, the amount of change the world has experienced over the last 16/48 has been pretty dramatic. And the perception of the US external to he US has changed proportionally. I'd like to think the trend won't persist for the full 48, but I also did not expect quite so much in the first 16/48.

US and Canadian production is largely irrelevant to the price. These are world comodities. If worldwide production drops, prices rise. As with oil/gas producers, domestic potash producers are under no obligation to sell locally. If prices are higher in europe/asia/africa, that domestic potash will be loaded onto ships until domestic prices rise to match.

much of canadian oil should be pretty insulated and thus also the US consumption of it.

its not particularly available to the rest of the globe because you need different refining.

i find it to be kinda funny that albertan oil prices jump with global markets when albertas major complaint is about a lack of access to global markets.

Canada also doesnt have the export capacity for selling potash directly. if its being redirected away from the US, its US importers deciding they can get a better price by re-exporting it

like a "in theory in ten years from now, these other customers could swap what oil theyre using, so were gonna charge you more now just in case"

Not that I've noticed looking at the cargo trains going by, but definitely a lot more bitumen tankers that's for sure.

Though potash is one part of three (Nitrogen < Hormuz / Phosphorus < Florida / Potassium < Saskatchewan) used in commerical fertilizer I believe.

(One person's perspective living in Southern Alberta)

It's the nitrogen fertilizer almost all of which is manufactured from methane + air.

Pedantically, most of it is manufactured by biological processes in the soil. Soy Beans are really good at this which is why it is planted so much (the food value is secondary, but enough to give it the edge over alternatives)

For supplemental fertilizer you buy though you are correct.

i dont think canada has had any drop in potash sales to the south. the main potash producers are even planning new US ports for exporting potash to global markets through.

which itself is a major factor - the US imports tons of potash from canada, only to re-export it elsewhere. a clampdown from canada would be more likely to hit a south korea or china more than the midwest

Are you forgetting the nitrogen? :)

The US provides a lot of its own supply there.

Nitrogen is pulled out of the air which is free but the process requires hydrogen which is acquired from disassembled methane, the price of which is a significant contributor.

US shale oil notably has a lot of natural gas - methane.

the methane isnt the issue, building and operating the processing plants is

Hard to find exact data but 60-80% of the cost to manufacture ammonia comes from the cost of natural gas. Feel free to look a price charts for both to see the correlation.

Long term yes, however the building in such a plant is very expensive in the short term. As such, no one is going to build a plant unless they actually think it will have reasonably high utilization.

The US produces most of their own nitrogen, but the same is not true of potash.

The US does have potash mines for example around Carlsbad New Mexico. But these cover only a percentage of domestic need. Perhaps they could be scaled up not sure.

Also famously near Moab, Utah.

Isn't the stuff west of Green River, Wyoming also potash?

A lot of crops need nitrogen. What has been impacted by Trump's Iran war is the supply of Urea through the Straight of Hormuz.

If the closure persists then no doubt other sources can ramp up to fill the void, but it's going to be too late for this season. Some Asian farmers have already chosen not to bother planting rice crops since the increase in fertilizer (urea) cost has meant they'd be losing money.

Fuel prices are also impacting imported produce prices.

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