How to Invest in Phosphate

What factors impact phosphate supply and demand?

The US Geological Survey's latest report on the phosphate industry shows that global phosphate rock production came in at 220 million metric tons (MT) in 2023, down slightly from 228 million MT in 2022.

China was the top phosphate rock producer last year by a long shot, putting out 90 million MT. Morocco is in second place with production of 35 million MT; the country also holds about 68 percent of global phosphate reserves. Third in line for production is the US, which produced 20 million MT of phosphate rock in 2023 from mines operating in the states of Florida, North Carolina, Idaho and Utah.

Phosphate is also produced in many other countries around the world, including Jordan, Russia, Saudi Arabia, Egypt, Vietnam, Peru, Tunisia, Brazil and Israel.

In terms of demand, the need for phosphate has been slowly increasing over the last few years. As mentioned, the world's growing population and the widening need for crop nutrients should keep demand growing steadily well into the future as well.

According to Future Market Insights, the global phosphate market is projected to expand at a CAGR of 2.4 percent between 2023 and 2033 to reach a value of US$21.4 billion by 2033. Demand for nutrient-rich food and specialty phosphates is driving this growth.

"Phosphates are essential components of fertilizers and soil amendments used to replenish phosphorous levels in the soil," the report states. "The increasing adoption of modern farming techniques and the focus on sustainable agriculture are further driving the demand for phosphates."

The International Fertilizer Association estimates that 85 percent of the world’s soils are deficient in nitrogen, while 73 percent are deficient in phosphorus (phosphates) and 55 percent are deficient in potassium (potash).

It's clear that the phosphate industry will need to look into additional mine expansion and exploration opportunities to meet the growing demand and future growth that is forecast for the sector.

How to start investing in phosphate?

With the future of phosphate looking bright, some investors are wondering how to get into the space. There are certainly ways to do so, although phosphate investing is a little trickier than investing in more mainstream commodities like gold and silver.

One way investors can invest in phosphate is by buying shares of an exchange-traded fund that has exposure to phosphate. The VanEck Agribusiness ETF (ARCA:MOO) is one example. However, most market participants choose to invest directly in phosphate-focused companies. Here are three of the largest producers:

• Nutrien (TSX:NTR,NYSE:NTR)
• Mosaic (NYSE:MOS)
• Vale (NYSE:VALE)

For more information on phosphate and potash companies that have been working to advance their projects, including smaller firms with development-stage projects, check out Phosphate Stocks to Watch, ASX Agriculture Stocks: 5 Biggest Companies and 5 TSX and TSXV Potash Companies.