Russia’s Sulfur Crisis: When Drones Knock Out 60% of Domestic Production
In 2024, Russia produced ~9.3 million tons of sulfur, with 60% (5.6 million tons planned) coming from a single facility – Gazprom’s Astrakhan Gas Processing Plant (3.3 million tons in 2024). Historically, Russia exported about one-third of its sulfur (~1.8–2 million tons per year), mainly to China, Brazil, and Morocco.
After repeated drone fragment impacts on the Astrakhan GPP throughout 2024 and early 2025, the plant had to stop multiple times for repairs and eventually ceased operations altogether.
The consequences came fast:
• October 2025 → Russia started importing sulfur for the first time in decades
• November 2025 → Russian government imposed a full ban on sulfur exports
Result: a critical shortage for domestic fertilizer and chemical industries at the exact moment when global sulfur prices are rising.
One single point of failure just turned the world’s former No. 2 sulfur exporter into a net importer – literally overnight.
How vulnerable are global commodity supply chains when 60% of a country’s output depends on one plant?
https://www.bloomberg.com/news/articles/2025-12-13/us-to-end-sanctions-on-belarus-potash-belta-says-citing-envoy
The U.S. dollar stumbled on Thursday, hitting multi-month lows against the euro, Swiss franc, and sterling and extending losses from the previous session, after the Federal Reserve delivered a less hawkish outlook than some had expected.
The Swiss franc drew support from the Swiss National Bank's decision to hold interest rates steady. The dollar fell 0.6% versus the franc to 0.7947 , after earlier touching its lowest since mid-November.
The greenback briefly found support earlier in the session as Asian shares and U.S. futures slid after disappointing earnings from U.S. cloud computing giant Oracle (ORCL.N), opens new tab reignited fears that surging AI infrastructure costs could outpace profitability.
But that support faded in the U.S. session.
The euro was last up 0.4% at $1.1740 after earlier hitting its highest since October 3.
Sterling was last flat on the day at $1.3387 after earlier touching its highest level in roughly two months.
The dollar also weakened against the yen, shedding 0.3% to 155.61 yen .
The Fed lowered rates on Wednesday by 25 basis points, but, as the move was widely expected, the reaction reflected much more the broader messaging, projections and the voting split.
"The market had more hawkish-leaning expectations going into the Fed meeting and I don't think (Fed Chair Jerome) Powell was especially dovish, but he kind of left the door open for further cuts," said Vassili Serebriakov, FX strategist at UBS in New York.
That was in stark contrast with the message given by the Australian central bank chief and an influential European Central Bank policymaker suggesting their next moves would be rate hikes.
"We've seen quite aggressive, hawkish repricing of expectations outside of the U.S. like Australia, Canada, even Europe — even ECB (European Central Bank) expectations were more hawkish seemingly validated by some ECB comments as well," Serebriakov said.
"So it's the Fed being a little more dovish versus what was expected, but there's also the contrast between the Fed and other central banks in the G10 where expectations are turning more hawkish."
The dollar was also pressured earlier by data showing that initial jobless claims increased by the most in nearly 4-1/2 years last week. Initial claims for state unemployment benefits jumped 44,000, the biggest increase since mid-July of 2021, to a seasonally adjusted 236,000 for the week ended December 6, the Labor Department said.
LIQUIDITY INJECTION
Also weighing on the dollar, U.S. Treasuries attracted bids and pushed yields lower after the Fed announced it would start buying short-dated government bonds from December 12 to help manage market liquidity levels, with an initial round totalling some $40 billion in Treasury bills.
That's on top of the $15 billion that the Fed will reinvest in T-bills starting this month from its maturing mortgage-backed securities (MBS).
The combined $55 billion in liquidity injection from the Fed is a positive for market sentiment and risky assets but negative for safe-haven assets such as the dollar.
Away from the dollar, the Swiss franc strengthened after the Swiss National Bank left its policy rate unchanged at 0% and said a recent agreement to reduce U.S. tariffs on Swiss goods had improved the economic outlook, even as inflation has somewhat undershot expectations.
The euro fell 0.2% against the Swiss franc to 0.9331 .
While the strength of the franc is causing problems for the SNB by weighing heavily on inflation, the SNB's chairman Martin Schlegel reiterated that the hurdle for negative rates is high.
Elsewhere, the Australian dollar was hurt by data showing employment in November fell by the most in nine months. The Aussie dollar dipped 0.2% to US$0.6663 .
Bitcoin , often viewed as a barometer of risk appetite, was hurt by the tech selloff and briefly slid back below the $90,000 level. It was last hovering slightly above that point, down 1.5% at $91,008. Ether was down more than 4% at $3,200.
Oil prices fell on Thursday as investors focused on Russia-Ukraine peace talks and eyed large surpluses in U.S. gasoline and diesel inventories.
Brent crude futures settled at $61.28 a barrel, down 93 cents or 1.49%. U.S. West Texas Intermediate crude finished at $57.60 a barrel, down 86 cents or 1.47%.
For most of the session, Brent and WTI were down more than $1 and nearly 2%, falling past lows last seen in October.
"The market has been weighed under by significant surpluses in gasoline and diesel inventories," said Andrew Lipow, president of Lipow Oil Associates. "You're seeing that play out in poor refining margins."
The U.S. Energy Information Administration reported on Wednesday that gasoline inventories rose by 2.5 million barrels in the previous week and distillate stockpiles grew by a similar amount.
The prospect of a possible peace agreement between Russia and Ukraine also appeared to be driving the market lower. Such a deal would likely increase the supply of Russian oil that is currently off the market for most of the world.
"There was a little bit of support following news of the drone strikes," said Phil Flynn, senior analyst with the Price Futures Group. "But there seems to be some movement on a possible path to peace between Russia and Ukraine. That took the support out of the market."
Ukrainian drones struck an oil rig belonging to Russia in the Caspian Sea for the first time, halting the facility's extraction of oil and gas, a source at the Security Service of Ukraine told Reuters on Thursday.
The leaders of Britain, France and Germany held a call on Wednesday with U.S. President Donald Trump to discuss Washington's latest peace efforts to end the war in Ukraine, in what they said was a "critical moment" in the process.
Russian Foreign Minister Sergei Lavrov said on Thursday that a visit to Moscow this month by U.S. envoy Steve Witkoff had resolved misunderstandings between the two countries.
Lavrov added that Moscow had handed over Russia's proposals on collective security guarantees for Ukraine to Washington.
STEEP DISCOUNTS DEMANDED ON VENEZUELAN CRUDE
Both benchmarks had settled higher a day earlier after the U.S. said it seized an oil tanker off the coast of Venezuela, as escalating tensions between the two countries raised concerns about supply disruptions.
"So far, the seizure has not trickled down to the market, but further escalation will impose heavy crude price volatility," said Emril Jamil, a senior oil analyst at LSEG.
The seizure was announced by Trump, whose administration did not name the vessel. British maritime risk management group Vanguard said the tanker, named Skipper, was believed to have been seized off the coast of Venezuela.
Traders and industry sources said Asian buyers were demanding steep discounts on Venezuelan crude, pressured by a surge of sanctioned oil from Russia and Iran and heightened loading risks in the South American country as the U.S. boosts its military presence in the Caribbean.
The International Energy Agency upgraded its 2026 global oil demand growth forecasts while trimming its supply growth predictions in its latest monthly oil market report on Thursday, implying a slightly narrower surplus next year.
The Organization of the Petroleum Exporting Countries, which also released its monthly report on Thursday, kept its forecasts for 2025 and 2026 world oil demand growth unchanged.
Morning. Intl paper still largely range-bound, but Nola urea saw bids come up y'day as phys barges traded +$3 on Jan, w/ March values in low-$360s. DAP Nola moved higher after news of extension to China's export halt, as Q1 traded $630.
AG
Dec $386//$395
Jan $370//$383
Feb $370//$380
Q1 $370//$385
Cfr Brazil
Dec $390//$400
Jan $375//$390
Feb $372//$385
Egypt
Dec $420//$440
Jan $390//$415
Feb $391//$410
Nola
Phys: Jan traded $358. Mar $362, $363
Paper:
Dec $353//$358 – traded $355
Jan $360//$364
Feb $360//$368
Mar $365//$372
Apr $360//$370
May $355//$368
Jun $350//$362
Brazil Amsul
Dec $180/$197
Jan $178//$195
UAN Nola
Dec $290//$320
Jan $285//$305
Feb $280//$305
DAP Nola
Dec $625//650
Jan $625//$640
Feb $630//$640
Mar $630//$645
Q1 $627//$640 – traded $630
MAP Brazil
Jan $625//$650
Feb $625//$655
Mar $630//$655
– UREA PRICES ARE SOFTENING ON THE LACK OF ANOTHER INDIA TENDER YET TO BE ANNOUNCED – SUBDUED DEMAND IN ALL OTHER MARKETS
– CHINA ANNOUNCED EXPORT RESTRICTIONS ON PROCESSED PHOSPHATE PRODUCTS UNTIL AUGUST 2026 AND THE FALLOUT OF THIS COULD INDICATE HIGHER INTERNATIONAL PRICES
-BRAZIL POTASH VALUES ARE INCREASING BUT OVERALL POTAH PRICES ARE EXPECTED TO FALL IN THE NEXT COUPLE OF MONTHS
-AMMONIA PRICES ARE HOLDING STEADY BUT WITH INCREASED SUPPLY PRICES ARE EXPECTED TO CORRECT DOWNWARDS
UREA
Urea demand has come to a standstill with little or no activity in major markets with Christmas and New Year celebrations approaching. The only exception is the pre-CBAM inventory buildup which has seen new trade routes evolving.
Soaring granular urea prices in Europe and Turkey at the end of October resulted in a spike of urea shipments from atypical origins, with arrivals from Nigeria, Qatar, China, Malaysia and Oman in November-December scheduled to hit over 300,000t.
Suppliers in Nigeria loaded at least three vessels last month, carrying over 70,000t in total, with two en route to Constanta in Romania and one arriving in the UK this week. Nigerian urea is duty free to the UK. The Christiana P also arrived in Constanta in the last week of November, carrying over 40,000t of Chinese granular urea, after a trading firm diverted the vessel away from Brazil to Romania, as prices in Europe jumped.
Constanta has emerged as an important entrepot for receipts of unusual-origin urea, given its access to a network of waterways thanks to its proximity to the Danube and its tributaries, including easy access to western Ukraine, as well as considerable demand from price-sensitive buyers in Romania.
Elsewhere, suppliers loaded two vessels with Qatari urea for Turkey, with one arriving in late November and one due to arrive in Iskenderun on 11 December. Turkey removed import duties on Qatari urea from August 1st. The Lucky Voyager is also en route to Iskenderun, loaded with around 35,000t of Malaysian granular urea.
And Constanta is also set to receive over 50,000t of Omani granular urea this week, with the vessel leaving Sur on 19 November.
Granular urea prices in the European region surged in late October and early November, as EU importers scrambled to line up cargoes ahead of the implementation of the carbon border adjustment mechanism (CBAM), reflecting additional carbon-related costs, in January. The dash for product drove prices in duty-free origins such as Egypt and Algeria — the typical main sources of EU imports — to unworkable levels of above $500/t fob, inviting deliveries from other more competitive and atypical origins.
Repeating sentiments from last week’s report, the USA is at USD 355 PST FOB in the barge, Brazil is sub USD 400 PMT CFR, Turkey appears to be at USD 435-440 PMT CFR duty paid which nets back to around USD 420 PMT FOB Egypt, far below interest from Egyptian producers. Middle East is struggling to achieve desired FOB levels with bids substantially below USD 380s FOB. Malaysian Petronas is busy supplying its India commitment and BF of Brunei is rumoured to sold 30,000 MT for January shipment in the high USD 380s PMT FOB. Indonesian Pupuk is awaiting export license for 2026 before it can re-enter the export market.
Iranian urea producer Pardis has sold 95,000t of granular urea at $376.10/t fob in two deals, slightly lower than pricing for its sales last week. Pardis sold cargoes of 50,000t and 45,000t, both for December shipment and on a fob Assaluyeh basis. The price is broadly in line with granular urea offers from most Iranian producers at $375/t fob for the week ending 12 December. But Pardis said negotiations are already under way for fresh sales at $377/t fob.
SE Asia demand is slow and some countries like Vietnam and Thailand are trying to recover from devastating floods.
The outlook for the urea market will depend on another urea tender in India but there are no signs coming from the current fertilizer conference in India that this will happen anytime soon. In the meantime, the scenario is for lower prices to continue.
PHOSPHATES
The big news emerging from China is that the NDRC has decided to ban exports of processed phosphates until August 2026. China has temporarily halted all exports of DAP, MAP and NPs until August 2026, according to multiple market sources.
Government officials will take measures to guarantee domestic supply of sulphur and sulphuric acid, with acid exports not allowed unless the export price is higher than domestic prices, as previously reported, and domestic refineries to be instructed to increase sulphur output.
Price ceilings on domestic sales of phosphate fertilizers are expected to remain stable until April 2026, sources said, contrary to some market expectations, with end retailers also under pressure to stabilise prices. This apparently to stem increased prices in the domestic Chinese market with imported sulphur prices going through the roof and with ammonia prices increasing as well.
MAP offers to Brazil continue to be reported at $630-640 PMT CFR this week with the lower end of the range understood to be for prompt supply from a trader and the upper end suggested to be for January loading from Russia.
Prompt MAP bids from Brazilian buyers are still reported to be around $620 PMT CFR, but market participants note some buying interest closer to $630 PMT CFR for February-loading cargoes.
One participant pegged Brazil’s MAP prices as low as $605 PMT CFR on 10 December. Some inland price indications have been heard as low as $600 PMT CFR equivalent over the past couple of weeks.
DAP activity remains at a standstill to India after high imports through 2025 with industry players meeting at this week’s FAI conference in New Delhi.
DAP stocks are being eroded somewhat through the Rabi season on high domestic sales though overall P2O5 stocks look healthy as the market begins to plan for the Kharif season 2026.
Availability is somewhat lacking with Saudi Arabia sold out of DAP for December loading although discussions continue to be reported over a DAP cargo from China and December DAP availability from Russia.
Offers have been indicated as low as $675pt cfr, though these have yet to be confirmed. Some buyers note bids no higher than $650pt cfr. Most buyers are on the sidelines and are now focused on Rabi sales and planning for Kharif imports.
The last purchase came two weeks ago by IPL from Ma’aden for 60,000t DAP in the high $680spt cfr.
The India DAP price was assessed at an indicative $675-688pt cfr last week pending further sales activity. The price dropped an average $120pt in the three months ending November.
Market participants suggest high DAP demand is being seen in the Rabi season with November sales as high as 1.6Mt from 1.5Mt while November NP/NPK sales are initially indicated at 1.5Mt from 1.65Mt in November 2024. The switch is understood to be due to recent increases in the NP/NPK maximum retail prices in India through 2025 while farmer DAP prices have remained stable.
Prices are expected to decline further through Q4 as buyer resistance to high prices grows across the globe. Still, prices are likely to remain historically high given limited overall global availability, while high raw materials prices should also provide some support. The latest export restrictions suggest that a price recovery may happen sooner than expected and, when it does come, prices are almost certain to be higher than previously expected and for longer.
POTASH
Brazil remains the focal point of the global potash market, with MOP prices climbing by $10/t to $360–370/t CFR. Several January offers have appeared at the top of this range, and some sources even report Q1 indications as high as $380–400/t CFR. This strength, however, is not rooted in fundamentals as farmer demand remains weak and was already limited at $350–355/t CFR. The sustainability of the current rally is increasingly questioned, with several market participants warning that higher prices may delay farmer purchasing or divert demand.
Prices in Southeast Asia remained stable, but activity increased significantly, led by a series of tenders. Standard MOP held at $360–380/t CFR, while granular MOP stayed at $380– 400/t CFR, largely unchanged from last week. Indonesia’s state-owned producer Pupuk closed a 190,000 t tender for pink sMOP, with offers ranging between $400–410/t CFR from major suppliers. In Malaysia, smaller tenders of 1,000–5,000 t were awarded at $360–375/t CFR, broadly consistent with recent levels.
In general, potash prices are expected to decline due to increased capacity, leading to more supply.
AMMONIA
The global ammonia market held largely steady this week after a sustained run of gains driven by acute tightness in spot availability. Although shortages persist across most regions, there are early indications that supply pressures may begin to ease, though confidence remains tentative. Contract values in Taiwan, China registered marginal gains to $460-480/t CFR. Spot offers around $510/t CFR were heard, though buyers showed little appetite for volumes at such elevated levels. Southeast Asia remained quiet by contrast, with prices holding steady after Trammo’s 7,000 t purchase at $480/t FOB last week pushed the benchmark higher. In the Middle East, market activity was muted again as no spot tonnes were available. Despite talk of $530/t FOB or higher circulating in the market, no confirmed trades beyond $500/t FOB have materialised. Market chatter suggests Ma’adens MPC plant will come back online by mid-to-end January.
Ammonia prices are poised to ease in the coming weeks on expectations of improved supply by January. If and when these additions are confirmed prices will correct lower significantly. Until then, values are expected to remain broadly stable.
Since November, caprolactam producers have been holding frequent meetings to discuss product margins and measures to reduce operating rates. As of the close on December 5th, the national operating rate of caprolactam-grade ammonium sulfate plants had been reduced to 76.79%, down 8.72% from 85.51% in early November. Based on an annual production capacity of 12.1 million tons, this corresponds to a decrease of roughly 3,200 tons in daily output.
At the same time, as operating rate-cut policies were implemented, the price of caprolactam—the primary product—rose from 8,000 RMB/ton to 9,300 RMB/ton. With this rapid rebound, producer margins have gradually improved. Supported by higher caprolactam costs, caprolactam-grade ammonium sulfate prices have also increased.
However, despite firm domestic prices, international demand remains limited, and port inventories continue to trend upward. As a result, downstream buyers—apart from granulation plants and essential industry, agriculture, and rare-earth users—have reduced their planned Q4 stockpiling for next year. This has led to weaker market participation and subdued trading activity.
China has temporarily halted all exports of DAP, MAP and NPs until August 2026, according to multiple market sources.
Government officials will take measures to guarantee domestic supply of sulphur and sulphuric acid, with acid exports not allowed unless the export price is higher than domestic prices, as previously reported, and domestic refineries to be instructed to increase sulphur output.
Price ceilings on domestic sales of phosphate fertilizers are expected to remain stable until April 2026, sources said, contrary to some market expectations, with end retailers also under pressure to stabilise prices.
Hearing NDRC block all exports until August 2026 for phosphates?
Morning. Offers crept lower on Int'l paper across JAN contacts to see AG trade $375 & Brazil $380cfr. Meanwhile Nola urea values edged higher with Feb-Apr paper trading in low-360s (up $3-$4 from last done). Mkts framed:
AG
Dec $386//$395
Jan $368//$380 – traded $375
Feb $365//$375
Q3 $365//$378
Cfr Brazil
Dec $390//$400
Jan $375//$384 – traded $380
Feb $377//$385
Q3 $375//$390
Egypt
Dec $420//$440
Jan $390//$415
Feb $390//$410
Nola
Phys: Jan traded $355
Paper:
Dec $352//$355
Jan $350//$358
Feb $358//$363 -traded $360
Mar $360//$365 – traded $363
Apr $355//$360 – traded $362
May $355//$365
Jun $350//$360
Brazil Amsul
Dec $180/$197
Jan $178//$195
UAN Nola
Dec $290//$320
Jan $285//$305
Feb $280//$305
DAP Nola
Dec $625//650
Jan $605//$620
Feb $605//$620
Mar $610//$625
Q1 $605//$625
MAP Brazil
Dec $615//$635
Jan-Feb $610//$635
The export facility will be closed until August of next year.
The National Development and Reform Commission will directly intervene to regulate sulfur and sulfuric acid. Under the same price, domestic supplies are restricted from being exported.
3. To ensure sulfur supply, the National Development and Reform Commission will hold a meeting with PetroChina and Sinopec this afternoon to increase the supply.
Manufacturing and distribution companies should not engage in delayed settlements; instead, they should agree on a flat price that will apply until April of next year, thereby stabilizing market expectations.
The final retail price for 5 does not provide any room for price increases. Distribution companies are responsible for stabilizing prices. It is suggested that the association begin reporting data for monitoring purposes, and violations can be reported.
Currently, the inventory levels of urea producers are still declining. Within the next month, the daily production capacity of the urea industry will see a slight decrease. Short-term production of compound fertilizers will continue, which will temporarily exert a strong influence on urea demand.
There are still expectations of buying in December for reserve needs. Despite minor fluctuations in the market, reserves continue to be stored at lower levels.
Overall, the decline in short-term urea plant inventories will also support a relatively strong fluctuation in the urea industry, with some of the inventory continuing to shift towards social inventories.
Prior to any changes in export policies, once the demand for reserves has reached its conclusion, there will be a significant downturn in the urea market. It is highly likely that this will occur in January. In the short term, the main production and distribution areas’ typical factory prices for urea will fluctuate around 1,620-1,680 yuan/ton.
Fertilizer Industry China Morning Reference 2025-12-11
❤ Sulfur: Yesterday, domestic sulfur spot market prices continued to rise. The reference price for granular sulfur at Zhenjiang Port was 4,200 yuan/ton, up 1.20% compared with the previous day. Market sentiment continues to improve, holders are reluctant to sell and are clearly withholding goods, terminal enterprises’ purchasing intentions are gradually being released, and traders’ enthusiasm to follow up is simultaneously increasing. Domestic sulfur prices continue to follow the upward trend; yesterday, mainstream liquid prices in the Shandong market were at 4,140–4,253 yuan/ton. It is expected that in the short term, sulfur market prices will remain at a high level.
❤ Urea: Yesterday, the domestic urea market fluctuated within a narrow range, with some factories making moderate transactions. Although traders’ shipments were lukewarm, factories, supported by accumulated orders, shifted their quotations from loosening to mainly stable. The market is temporarily stuck in a stalemate, waiting for demand and news guidance.
❤ Synthetic Ammonia: Yesterday, the synthetic ammonia market was stable with supplementary increases, and the trading focus moved higher. Market linkage was strong, and in some regions environmental protection measures limited production. Downstream within the region actively took orders, new orders improved, and with high-priced ammonia enterprises, the market atmosphere turned cautious. Short-term trading was acceptable, with expectations of supplementary increases at lower levels, stability at higher levels, and active shipments being the main focus.
❤ Ammonium Sulfate: Yesterday, the domestic ammonium sulfate market weakened and fell. At present, terminal demand is in the off-season, and coupled with the previous sharp price increases, current domestic and foreign granular prices are inverted. Raw material factory prices have rationally retreated. It is expected that in the short term, the ammonium sulfate market will mainly adjust downward.
❤ Ammonium Chloride: Yesterday, the domestic ammonium chloride market was mainly stable. Ammonium chloride enterprises were reluctant to sell at low levels, with a strong mentality of holding prices firm. Some new prices were controlled by orders, and current shipments were still mainly executing previous orders. Downstream compound fertilizer enterprises and traders were relatively active in receiving goods. With short-term demand support, the ammonium chloride market may continue to operate with firm prices.
❤ Melamine: Yesterday, the domestic melamine market was mainly stable. In the past two days, plant shutdowns and production reductions concentrated in the market, tightening supply in some regions, which provided certain support to the market. However, downstream demand remained weak. In the short term, the market was mainly a game between upstream and downstream, with narrow fluctuations in operation.
❤ Phosphate Fertilizer: Yesterday, the domestic monoammonium phosphate market focus moved upward. In Central China, 55% powder ex-factory was 3,750–3,850 yuan/ton, and it is reported that high-end transactions have already occurred. Most factories are still suspending orders. Overall, downstream buyers were cautious in chasing higher prices, with limited actual transactions. However, raw material sulfur prices continued to rise, increasing cost pressure. In the short term, the market will remain high and firm.
Yesterday, the domestic diammonium phosphate market continued to operate steadily with a slightly strong tone. Raw material sulfur prices continued to climb, further increasing production cost pressures for enterprises. The tight situation in market spot supply has not eased. Operators held prices firm while waiting for the market, but the trading atmosphere cooled somewhat. New order transactions were average. In the short term, the market will remain high and firm.
❤ Potash Fertilizer: Recently, domestic potash fertilizer market prices have fluctuated relatively little. Domestic potassium chloride production continues, with official prices stable, but sales prices vary across regions. The overall supply of imported potassium chloride remains tight. Domestic potassium sulfate prices remain stable, with resource-type potassium sulfate manufacturers maintaining stable production and continuing to supply downstream factories.
❤ Compound Fertilizer: Yesterday, the domestic compound fertilizer market maintained high-level consolidation. With costs gradually adjusting, low-end quotations in the market decreased. Enterprises mostly held firm on prices, but high-priced transactions were somewhat hindered. Downstream maintained a wait-and-see attitude, and new order trading was flat. Enterprises were fulfilling previous orders. In the short term, the compound fertilizer market will continue narrow-range consolidation.
The U.S. dollar rose against major currencies on Monday in choppy trading ahead of a week packed with central bank meetings and headlined by the Federal Reserve, where an interest rate cut is all but priced in, but investors braced for signals of a milder easing cycle than expected.
The yen, on the other hand, weakened across the board after a powerful magnitude 7.6 earthquake shook Japan's northeast region late on Monday, prompting tsunami warnings and orders for residents to evacuate.
Besides the Fed decision on Wednesday, the central banks of Australia, Brazil, Canada and Switzerland also hold rate-setting meetings, although none of these are expected to change monetary policy.
Analysts expect the Fed to make a "hawkish cut", where the language of the statement, median forecasts and Chair Jerome Powell's press conference point to a higher bar for further rate reduction.
The Federal Open Market Committee, which sets monetary policy, is expected to announce on Wednesday that it will lower the benchmark overnight rate by 25 basis points to a range of 3.50%–3.75%, with the central bank easing for a third straight meeting.
That could support the dollar if it pushes investors to dial back expectations for two or three rate cuts next year, though messaging could be complicated by policymakers' divisions; several have already all but indicated their voting intentions.
"In an economy that is not falling apart and inflation is relatively tame, the Fed can feel comfortable cutting interest rates while also not promising nor guaranteeing further moves into the future," said Juan Perez, director of trading, at Monex USA in Washington.
Hard to envision officials plotting into the future much when they really still need to look into the past to better assess where we are. Where we are seems to be a period of stagflation, so you are getting mixed views as officials themselves do not hold consensus over conclusions regarding the economy."
The dollar index was last up 0.1% at 99.07 . Against the Swiss franc, the greenback rose 0.2% to 0.8066 franc .
HIGH RISK OF DISSENT
"We expect to see some dissents, potentially from both hawkish and dovish members," said BNY's head of markets macro strategy, Bob Savage, in a note to clients.
The Federal Open Market Committee has not had three or more dissents at a meeting since 2019, and it has happened just nine times since 1990.
Even though the U.S. currency has drifted lower for the past three weeks, dollar bulls have recovered some of their nerve.
Weekly positioning data shows speculators hold their largest long position – one that assumes the value of the dollar will rise – since before President Donald Trump's "Liberation Day" tariff bombshell in early April, which sent the currency tumbling.
The labor market is softening, but overall growth is holding up, the stimulus from Trump's "One Big Beautiful Bill" should start to filter through and inflation is still well above the central bank's target rate of 2%, analysts said.
YEN WEAKENS AFTER EARTHQUAKE
The yen slid after news of a strong earthquake in Japan. Depending on the extent of the earthquake's damage, the Bank of Japan could delay an expected rate hike next week, analysts said.
The dollar rose 0.3% versus the yen to 155.97 yen , while the euro climbed 0.3% as well to 181.42 yen .
The next BOJ monetary policy meeting is scheduled for December 18-19, 2025, with the policy decision and statement expected on the second day.
In Europe, the euro was slightly lower at $1.1639. It was earlier lifted by higher euro zone bond yields. German 30-year yields hit their highest since 2011 in early trading.
Unlike the Fed, the ECB is not expected to cut rates again in the coming year. Influential policymaker Isabel Schnabel on Monday said the central bank's next move could even be a hike.
In other currencies, the Australian dollar briefly touched a high of US$0.6649, the highest since mid-September, to last trade down 0.3% at US$0.6621.
The Reserve Bank of Australia meets on Tuesday after a run of hot data on inflation, economic growth and household spending. Futures imply the next move will be a hike, possibly as soon as May.
The Bank of Canada is also widely expected to leave rates on hold on Wednesday and a hike is fully priced by December 2026. The Canadian dollar fell against the greenback, which advanced 0.3% to C$1.3850. The Canadian currency hit 10-week highs on Friday following strong jobs data.
Sterling held around $1.3327 versus the dollar, flat on the day.
Take Responsibility as the Main Force in Ensuring Supply
Jointly Build the Foundation for Stable Phosphate Fertilizer Prices
Proposal
Phosphate fertilizer is an important material in agricultural production. Its stable supply and steady pricing are directly related to national food security and the overall situation of agricultural production. At this critical stage of winter storage and spring sales preparation, as the “main force” among state-owned phosphate fertilizer production enterprises, we issue the following proposal to the entire industry:
1. Strengthen Main Responsibility and Make Every Effort to Ensure Phosphate Fertilizer Supply
Guizhou Phosphate will earnestly fulfill its responsibility as the main supplier, fully mobilize existing production resources, optimize production organization and scheduling, and ensure the maximum release of effective production capacity. At the same time, through lean management, we will strive to resolve the pressure of rising costs and ensure that the total supply of phosphate fertilizer in the market remains sufficient.
2. Adhere to Industry Self-Discipline and Jointly Maintain Market Order
We propose that all industry producers and distributor partners should jointly ensure supply and stabilize prices, resolutely eliminate behaviors that disrupt market order such as hoarding and price manipulation. At the same time, we should establish a scientific and reasonable pricing system and jointly maintain a fair and orderly market environment.
3. Deepen Coordination and Accurately Match Market Demand
We propose that all industry producers, distributor partners, and end users strengthen communication and mutual trust, accurately match regional market demand, and make every effort to ensure supply.
Let us, with a high sense of responsibility and mission, actively take initiative, collaborate closely, and resolutely fulfill our social responsibility to ensure supply and stabilize prices, jointly safeguarding the solid foundation of agricultural production and national food security.
Guizhou Phosphate Agricultural Resources Co., Ltd.
December 9, 2023
(Company stamp: Guizhou Phosphate Agricultural Resources Co., Ltd., Social Credit Code 5227012058464)