Huatai Securities: The U.S. classifies phosphate-based agricultural inputs as strategic resources, with far-reaching implications

Huatai Securities states that on February 18, 2026, the Trump administration issued an executive order citing the Defense Production Act, officially designating phosphorus elements and glyphosate herbicide as strategic resources in the United States to ensure the security of the domestic supply chain. In recent years, about 80% of global phosphorus resources downstream are used for phosphate fertilizers. Due to demand from genetically modified resistant seeds, glyphosate has become the world’s leading herbicide, and both are core components of global agricultural supplies. According to USGS, in 2025, the U.S. phosphorus ore import dependency was 16%, mainly from Peru and Morocco. The U.S. has sufficient domestic capacity for glyphosate, but considering supply to Europe and South America, imports of Chinese glyphosate are still necessary. Relatively, China has a high self-sufficiency rate in phosphorus ore, and exports net glyphosate with slightly excess capacity. We believe that including phosphorus-based agricultural inputs as strategic materials reflects the U.S. emphasis on supply stability. In the short term, under the backdrop of low grain prices and weak demand, it is unlikely to quickly impact market prices. However, if U.S. stockpiling demand increases, it could boost the international market for phosphate fertilizers and glyphosate.

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Huatai | Chemicals: U.S. Classifies Phosphorus-based Agricultural Inputs as Strategic Resources with Far-reaching Impact

Key Points

On February 18, 2026, the Trump administration issued an executive order citing the Defense Production Act, officially designating phosphorus elements and glyphosate herbicide as strategic resources in the United States to ensure the security of the domestic supply chain. In recent years, about 80% of global phosphorus resources downstream are used for phosphate fertilizers. Due to demand from genetically modified resistant seeds, glyphosate has become the world’s leading herbicide, and both are core components of global agricultural supplies. According to USGS, in 2025, the U.S. phosphorus ore import dependency was 16%, mainly from Peru and Morocco. The U.S. has sufficient domestic capacity for glyphosate, but considering supply to Europe and South America, imports of Chinese glyphosate are still necessary. China has a high self-sufficiency rate in phosphorus ore, and exports net glyphosate with slightly excess capacity. We believe that including phosphorus-based agricultural inputs as strategic materials reflects the U.S. emphasis on supply stability. In the short term, under the backdrop of low grain prices and weak demand, it is unlikely to quickly impact market prices. However, if U.S. stockpiling demand increases, it could boost the international market for phosphate fertilizers and glyphosate.

Resource Endowments of Major Countries in Phosphorus and Glyphosate

According to USGS, in 2025, global phosphorus ore production is mainly concentrated in China, Morocco, the U.S., Russia, and the Middle East, accounting for 44%, 14%, 8%, 6%, and 13%, respectively. Morocco, as the country with the largest phosphorus reserves globally, has slow development. U.S. phosphorus ore is mainly supplied by Mosaic, but imports still rely on Morocco and Peru. Europe depends on Middle Eastern, Moroccan, and Russian resources. China has high self-sufficiency but controls exports. Despite rapid growth in demand for lithium iron phosphate in recent years, phosphate fertilizers remain the main downstream of global phosphorus resources. In contrast, global effective capacity for glyphosate is mainly concentrated in China and the U.S. According to Baichuan Yingfu, China’s glyphosate capacity in 2025 is 810,000 tons, accounting for 69% of the global total. Due to cost factors, Europe and the U.S. still need to import large quantities of Chinese glyphosate. Since Bayer’s integrated glyphosate production mainly occurs at its factories, ongoing carcinogenic lawsuits since 2018 have weakened supply stability. We believe that the core reason for classifying these as strategic resources is to strengthen supply stability.

Mid-term Revaluation of Strategic Resources

Historically, the U.S. has made strategic reserves, unilateral controls, domestic supply guarantees, and even global supply chain restructuring for key minerals during World War II, the Cold War, and recent years, including rubber, manganese, chromium, uranium, crude oil, and copper. According to The Politics of Scarcity by Robert C. Weaver (1981), due to the demand for phosphorus in agriculture, military, and industry, the U.S. classified it as a strategic resource during WWII and the Cold War. Bloomberg reports that on February 20, the price of diammonium phosphate (DAP) in major corn-producing regions was $687.50 per ton, up over 30% from mid-2023 lows, at a historically high level. However, upstream phosphate ore and sulfur prices remain high, squeezing fertilizer production profits. Baichuan Yingfu reports that on February 20, domestic glyphosate prices were 23,000 yuan per ton, at a low level for over two years, with low production profits. We believe that if global countries gradually begin stockpiling phosphate resources and glyphosate, it could continue to boost the international phosphate fertilizer market (domestic supply guarantees) and reverse the domestic glyphosate market downturn.

Demand-Driven Reassessment of Phosphorus Resources and Glyphosate Market Recovery

Since 2021, domestic phosphate ore prices have remained high, benefiting from increased demand for fertilizers and lithium iron phosphate. We believe companies with capacity expansion potential have advantages. As energy storage demand grows, phosphate salts may see a recovery. As the world’s leading pesticide, glyphosate’s industry cycle is aligned with the overall pesticide sector, which has been at a bottom for over two years. We believe that with supply-side “internal competition” reduction and demand-side inventory replenishment, along with strategic reserves, the industry’s outlook may gradually improve.

Risk Warning: Risks include policy disruptions in major countries and weaker-than-expected agricultural demand.

(Article source: Yicai)