Insight Focus
- Weak demand, demand destruction drag prices lower.
- Russian supply turns potash market bearish
- ADB seeks 500k tonnes of fertiliser for West Africa
The fertiliser industry is at a crossroads in terms of prices and demand destruction.
Fertiliser prices are coming down. The June contract for delivery of ammonia to Tampa, Florida, from Yara to Mosaic fell USD 425 to USD 1,000 a tonne last week, which stunned the market.
The drop was down to weak agricultural and industrial demand in the US compounded by increased supplies of ammonia in the Middle East as well as competitive gas prices in Europe.
Urea Prices Lower
Urea prices also fell as India’s 1.6-million-tonne purchase failed to offset the effects of demand destruction, weak demand in Brazil, Europe and the US. The other issue is that Russia seems to be able to export products to countries it deems friendly such as Brazil and India, meaning buyers are holding back to take advantage of lower prices.
Potash markets have also become bearish due to supply from Russia as well as affordability for farmers. However, due to no exports from Belarus because of sanctions, market expectations are that potash prices could be kept relatively stable.
Phosphate Prices in East-West Divide
The phosphate market has become East of Suez and West of Suez price differentiated in a multi-tiered system over diammonium and monoammonium phosphate prices (DAP/MAP). Prices are now in a USD 857-1,220/tonne range depending on market and suppliers.
The low end is the US New Orleans barge market, the highest is in Europe where OCP of Morocco is trying its best to maintain high prices. In the middle is India which is now receiving Russian products at around the USD 925/tonne, CFR India.
OCP and the Indian government are at a stalemate on the benchmark Q2 phosphoric acid price. India’s Fertilizer Ministry told CNBC news last week that “nothing is acceptable above last quarter price of USD 1,530/tonne, CFR India. Two years ago, this price was USD 550/tonne.
Fertiliser Sought for Africa
OCP is also in talks on the supply of 200k tonnes of phosphates and blended fertiliser with the African Development Bank, a source told Reuters. The ADB is seeking 500,000 tonnes of fertilizer for West Africa to avert a food crisis. The source said Ghana, Mali and Burkina Faso were the countries in most immediate need. The ADB is also in talks with Indorama and Dangote of Nigeria for the supply of 300k tonnes of urea, the source added.
Other Insights That May Be of Interest…
How Farmers are Working Around High Fertiliser Prices and Shortages
China’s Agricultural Output to Drop on Substandard Fertiliser Use?
