WINNIPEG, Manitoba (Reuters) – Phosphate fertilizer producers, including Mosaic Co and Potash Corp of Saskatchewan, are paying the highest prices in two years for sulfur, a key ingredient in their farm products, but farmers are the ones absorbing the extra cost.
Higher sulfur costs, the result of tight global supplies and strong Chinese demand, come as fertilizer makers struggle against a crop price slump that has diminished farmer buying power and as new global phosphate supplies come on stream.
The spike in thinly traded sulfur caused “a bit of pandemonium,” as it is a byproduct of oil and gas output, making it difficult to fill shortages quickly, said Andy Jung, director of market and strategic analysis at Minnesota-based Mosaic.
Mosaic and Potash, among others, convert bright-yellow sulfur into sulphuric acid to make diammonium phosphate (DAP), a widely used phosphorus fertilizer.
While crucial for fertilizer, sulfur is a small, niche product for energy producers that they remove from oil to prevent acid rain-causing emissions. Potential beneficiaries of higher sulfur prices include producers Teck Resources, which declined to comment, and Suncor Energy, which did not respond.