(Bloomberg) -- The world's largest crop-nutrient supplier has taken to hoarding key chemicals from China in case the trade war between Washington and Beijing gets even worse.
Nutrien Ltd. has built up a “strategic inventory” of the chemical ingredients it imports from China. The move comes in case the U.S. decides to increase a 10 percent tariff on the Asian goods to 25 percent, Chief Executive Officer Chuck Magro said. Trade uncertainty is pressuring global crop prices, and the stockpiles will act as a “buffer” and help the company avoid hiking the prices it charges to farmers, he said.
“We have built some inventory on key crop chemistry that come out of China,” Magro said in a telephone interview following the company's fourth-quarter earnings. “That will hopefully take us through most of the spring season,” when farmers in North America will plant this year's crops, he said.
Nutrien built its inventories in 2018, and now has ample supplies for the spring, especially after one of the wettest falls in U.S. history reduced fertilizer application last year, Magro said. While it doesn't make sense for the company to add to its current stockpiles, farmers, retailers and suppliers may bear the brunt of increased costs later in the year if the trade dispute doesn't get resolved, he said.
“We're going to wait and see how things play out,” Magro said. “If there's a trade settlement, that will be good news.”
To contact the reporter on this story: Jen Skerritt in Winnipeg at jskerritt1@bloomberg.net
To contact the editors responsible for this story: Millie Munshi at mmunshi@bloomberg.net, Patrick McKiernan
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