Coarse grains: U.S. leads world production
The United States is the world’s largest exporter and producer of coarse grains, accounting for 24% of global exports and 25% of global production in the fiscal year ending December 31, 2022, according to USDA data.
To note: Coarse grains are cereal grains other than wheat and rice, including corn, barley, sorghum, rye and oats.
Global demand for these coarse grains is growing due to needs for feed, food, brewing and biofuels.
CVR Partners indicates that a substantial amount of nitrogen is consumed in the production of these crops to increase yields.
According to Fertecon Limited estimates for 2022, the United States is the world’s third largest consumer and importer of nitrogen fertilizer.
Fertecon is an agency that provides information and market analysis on fertilizers and fertilizer raw materials for the fertilizer and related industries, as well as for international agencies.
Fertecon’s estimates show that the United States accounted for 11% of total global nitrogen fertilizer consumption by 2022, with China and India as the top consumers accounting for 22% and 17% of total global nitrogen fertilizer consumption, respectively.
North American nitrogen fertilizer producers predominantly use natural gas as their primary feedstock.
Over the past five years, U.S. oil and natural gas reserves have increased significantly due to, among other factors, advances in shale oil and gas extraction, as well as relatively high oil and gas prices.
In February 2022, Russia invaded Ukraine, which tightened global nitrogen fertilizer supply conditions as economies began to recover from the global Covid-19 pandemic.
Following the invasion of Ukraine, Russia also began to restrict natural gas supplies to Europe in response to European sanctions against Russia.
As a result, the costs of natural gas as a feedstock in Europe increased significantly and led to the closure of multiple fertilizer plants.
Some European countries also reduced the industrial use of natural gas, leading to a deterioration in the profitability of fertilizer production in the region.
In addition, China and Russia restricted fertilizer exports for much of 2022 to ensure domestic availability.
In North America, natural gas prices increased throughout 2022, but declined in January 2023.
However, the increase in nitrogen fertilizer prices more than offset the increase in natural gas costs through 2022.
As a result, North America remains a low-cost region for nitrogen fertilizer production.