Food Outlook - April 96

FERTILIZERS

International fertilizer spot prices showed modest changes during the recent three months and remained at a relative high level when compared to six months ago. It is foreseen that North American demand for fertilizers will remain strong, reflecting the expected expansion in maize and wheat planted area this year as the result of relative high crop prices and the possible enactment of the US Farm Bill that includes "Freedom to Farm" provisions. In Latin America, fertilizer consumption might further benefit from lower domestic prices through abolishments of import duties and taxes on fertilizers imported from other regional suppliers. In Turkey fertilizers continue to receive a 50 percent price subsidy which has stimulated demand by 10 percent in 1995. In Bangladesh adequate fertilizer supply had been arranged for the planting of the Boro rice crop. The earlier implemented ban on urea exports remains in force so far. The temporary export duty on selected fertilizers introduced last year in the Russian Federation is expected to continue in an effort to ensure adequate supply to the domestic market. This may affect price levels in low volume markets.

The urea price decreased by U.S.$ 20-30 per ton at the beginning of 1996 and has been stable around U.S.$ 210 per tons in the first two months of the year, but there are indications that it will increase again, although modestly. China procured considerable quantities of urea from eastern Europe lately in anticipation of the introduction of an import tax effective 1 April. However, Chinese purchases continue for arrivals beyond that date. India intends to import some 925 000 tons of urea before mid-year against an import target established of 2.2 million tons for 1996. In Indonesia suppliers are now expected to enter again the market after a phased lifting of a ban on exports. The size of the demand for urea imports in Vietnam has been estimated at 1.4 million tons while in the Philippines, where domestic prices are stable, import requirements are yet to be determined.

The prices observed for ammonium sulphate have slowly but steadily increased during the last 12 months. The diammonium phosphate (DAP) price has for the last three months consistently fluctuated around U.S.$ 250 per ton and is expected to remain at this relative high level in the short term. DAP consumption for winter crops in India has now come to an end and stocks are 60 per cent higher than a year ago. Domestic DAP production has reportedly been reduced by half. Pakistan and the Islamic Republic of Iran are shortly to arrange DAP procurement. In Europe no major price changes are envisaged as stocks are ample while in the United States demand is expected to be fuelled by high crop prices.

The price of muriate of potash (MOP) has shown a slight increase after having been stable during the latter part of 1995. Significant quantities of MOP have been shipped from Canada to China but there is uncertainty regarding the shipment of another 500 000 tons in view of temporary limited absorptive capacity. Demand for MOP is envisaged to increase in Brazil and Indonesia though the impact on price developments of imports by these countries may be modest as the quantities involved are relatively small.

AVERAGE FERTILIZER SPOT PRICES (bulk, f.o.b.)