The fertiliser market, while currently meeting a calm period with no price headwinds or tailwinds, is likely to bring farmgate price reductions in the coming weeks.
The May Rabobank New Zealand agribusiness monthly shows many fertiliser markets are in mid-season with no big price movements reported, nor have elements emerged that could change the short-term price doldrum outlook.
Rabobank agriculture grains and oilseeds analyst Vitor Pistoia said one country that could cause some price movement is India, though the urea stocks are reported to be comfortably at the 10 million tonne mark.
Other potential price supporting factors that have not materialised relate to China, where the government has further reduced exporting certificates’ validation period from 60 days to 30.
The previous reduction to 60 days was made in November 2023, leading to a 95% year-on-year reduction in first-quarter 2024 exports.
The Middle East spot reference price dropped 14% during April and is now at US$430 ($711) a tonne.
Since November 2023 this price has dropped 24%.
The higher output of phosphate fertilisers did impact the market with Morocco DAP prices dropping 4% during April and now at USD838/t while Indian importers are experiencing negative margins.
“In the coming weeks, no price upside is expected, even from South America, which is replenishing its stocks.”
The impact of the recent announcement of higher United States duties on Morocco DAP-MAP, an increase from 2.12% to 14.2%, is yet to be assessed. The farm input price stagnation also encompasses agrochemicals.
The Chinese ex-works prices for key products reduced by 2.4% in the last 30 days, aggravating already stressed manufacturers’ margins.
“To put it into perspective, a basket of 12 active ingredients composed of herbicides, insecticides, and fungicides is showing prices 36% lower than the January 2020 level.
“We do not expect the overproduction to be resolved any time soon, even if grains and oilseeds were to experience a widespread positive price cycle.
Farmers will be questioning why farm input prices have not reduced much.
“We see this as the cost to do business.
“Despite the reduction in the price of raw materials, like natural gas, in recent months, other prices have remained steady, like freight and interest rates.
“As farm input supply chains are long and complex, they are more resilient to price swings.”
Pistoia said looking ahead, recent announcements around container rates could bring farmgate price reductions down the road.
The global container index dropped 30% since its November hikes as the Middle East shipping issues are being circumvented and global trade finds its way.
Further cost relief comes from Panama with the Panama Canal Authority announcing it will slowly increase the transit to 31 vessels per day by mid-May and 32 by June.
At the peak of the recent drought, the transit numbers were slashed to 24.
