|That's a big bag of urea. |
This is a story about one of those unsung forces that quietly keep the world running. It is a story about the clockwork interconnectedness of modern civilization, about how disturbances in one part of the planet can kick up storms in another.
This is a story, naturally, about urea.
Prices for the humble chemical — yes, the stuff in urine — are soaring to levels not seen in over a decade. In this time of everything shortages and inflation worries, that alone might not sound too surprising. But urea links up several disparate-looking strands of global economic disruption, showing how easily extreme weather and shipping turmoil can cause supply shortfalls to radiate.
People and industries of all kinds are feeling the shocks. In India, a lack of urea has made farmers fear for their livelihoods. In South Korea, it meant truck drivers couldn’t start their engines...
...China and Russia, two of the biggest producers, have restricted exports to ensure supplies for their own farmers. In China’s case, an energy crunch led some areas to ration electricity, which forced fertilizer factories to slash production.
Hurricane Ida drove several large chemical plants to suspend operations when it tore through the U.S. Gulf Coast in August. Western sanctions on Belarus have hit that nation’s production of potash, the key ingredient in another fertilizer. Port delays and high freight fees — plant food is bulky stuff — have added to costs.
This seems like something directly tied to high energy prices, as well as high shipping prices. It will ultimately end up with higher food prices, which is not great. Will be interesting to see what the Fed does in response...