China is rolling out a quota system to limit exports of phosphates, a key fertiliser ingredient, in the second half of this year, analysts said, citing information from the country's major phosphate producers, reported Reuters.

The quotas, set well below year-ago export levels, would expand China's intervention in the market to keep a lid on domestic prices and protect food security while global fertiliser prices are hovering near record highs.

Last October, China also moved to curb exports by introducing a new requirement for inspection certificates to ship fertiliser and related materials, contributing to tight global supply.

Fertiliser prices have been buoyed by sanctions on major producers Belarus and Russia, while surging grain prices are boosting demand for phosphate and other crop nutrients from farmers around the world.

China is the world's biggest phosphates exporter, shipping 10 million tonnes last year, or about 30% of total world trade. Its top buyers were India, Pakistan and Bangladesh, according to Chinese customs data.

China appears to have issued export quotas for just over 3 million tonnes of phosphates to producers for the second half of this year, said Gavin Ju, China fertiliser analyst at CRU Group, citing information from about a dozen producers who have been informed by local governments since late June.

That would mark a 45% drop from China's shipments of 5.5 million tonnes in the same period a year ago.

The National Development and Reform Commission, China's powerful state planning agency, did not respond to a request for comment on its quota allocations, which have not been announced publicly.

Top phosphates producers Yunnan Yuntianhua 600096.SS, Hubei Xingfa Chemical Group and state-owned Guizhou Phosphate Chemical Group (GPCG) did not answer calls or declined to comment when contacted by Reuters.

Analysts at S&P Global Commodity Insights said they also expect a quota of about 3 million tonnes in the second half.

Although China has imposed export duties on fertilisers in the past, the latest measures mark its first use of inspection certificates and export quotas, analysts said.

Other major producers of phosphates, such as widely used diammonium phosphate (DAP), include Morocco, the United States, Russia and Saudia Arabia.

The surge in prices over the last year has raised concerns for Beijing, which needs to guarantee food security for its 1.4 billion people even as all farm input costs surge.

Domestic Chinese prices remain at a significant discount to global prices, however, and are currently about $300 below the $1,000 per tonne quoted in Brazil, incentivising exports.

China's phosphate exports rose in the first half of 2021 before dropping off in November, after the requirement for inspection certificates was introduced.

DAP and monoammonium phosphate exports in the first five months of this year totalled 2.3 million tonnes, down 20% from a year ago.

Export restrictions will support high global prices, even as they weigh on demand and send buyers looking for alternative sources, analysts said.

Top buyer India recently capped the price importers are allowed to pay for DAP at $920 per tonne, and demand from Pakistan is also muted due to high prices, said S&P Global Commodity Insights.

Although prices have dropped slightly in recent weeks as the market adapts to the repercussions of the Ukraine crisis, they would have dropped more if not for China's export quotas, said Glen Kurokawa, CRU phosphates analyst.

"There are some other sources, but in general the market is tight," he said.