By Andrew Whitelaw | Source: World Bank, Trade
In the rush to harvest all eyes are on grain prices, with the hope of finding any opportunities to price at higher than current levels. At Mecardo, we think it is important to take a whole of farm approach to marketing and include the pricing of inputs. In this report, we look at global fertilizer prices.
The market for both DAP and Urea fertilizers have both fallen heavily since the start of the year, this is a great opportunity for grain growers, which have fertilizer as one of their largest input costs. It is important to keep a track of where fertilizer prices are travelling, for when it comes time to negotiation with your fertilizer supplier. The more informed that you are on the market, the better chance you will have to get a good deal on your purchase.
The data we use for our charts is based on prices collected by the world bank, and it has to be remembered that these are not local prices. There will be a basis or a difference between these prices and what you will pay at a local level.
In figure 1, we can see that Urea rose in price slightly during October however the rise in A$ was limited to $1.97, and $20.50 above the lows achieved during July. The Urea price is based on free on board (FOB) on the Black Sea.
In figure 2, DAP prices fell A$9, and in A$ terms is at its lowest level since early 2014 however in US$ it is at it’s lowest level since the mid 2000’s. The DAP quoted is based on FOB US gulf.
Supply and demand
Urea: There were plant shutdowns in Italy and Ukraine during September/October, however high stocks of Urea in EU and abundant supply from Egypt has kept prices from rising substantially. In the US, a new $1.8bn facility is due to open which will curtail requirements for imports into the US.
DAP: There is an excess of DAP supply, and with Indian and Chinese buyers sitting on large stocks it is unlikely that we will see large upticks in prices for the short to medium term.
The fertilizer market is currently at low levels especially for Urea, however the market outlook remains bearish to neutral reducing the impetus to go out straight away and stock up.
We recommend keeping a close eye on both the international market and local pricing levels to determine a fair value in the coming months.
Mecardo information is provided to assist in your marketing decisions. It contains a range of data and views on the current market. It is not intended to constitute advice for a specific purpose. Before taking any action in relation to information contained within this report, you should seek advice from a qualified professional. The information is obtained from a variety of sources and neither Mecardo nor Ag Concepts Advisory will be held liable for any loss or damage whatsoever that may arise from the use of information or for any error or mis-statement contained in this report.
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