The low level of global grain stocks and strengthened grain prices, together with high oilseed prices and relatively strong non-cereal commodity prices, has led to an increase in fertilizer consumption in 1995/96 for the second consecutive year, after the 5-year declining trend. Fertilizer consumption in 1995/96 is now expected to increase by 5 percent to 128 million tons. The estimated growth in fertilizer demand is primarily expected to originate from China, followed by North America and to a lesser extent by growth in South Asia, central Europe and the Near East while demand in Central- and South America is likely to decline. Marginal growth is foreseen in Africa and a gradual reduction in consumption in western Europe. Of the three major plant nutrients, nitrogen will show the highest growth rate, over 6 percent, followed by phosphates, 3 percent, and potash 2 percent. Nitrogen consumption is expected to almost reach the level recorded in 1988/89, while, potash and phosphate consumption would remain over 20 percent below the levels recorded in 1988/89.
AVERAGE FERTILIZER SPOT PRICES (bulk, f.o.b.)
last year 1/
|( . . . . . . . . . U.S.$/ton . . . . . . . . . )||( percentage )|
|eastern Europe||175-180||184-187||157-163||+ 15.8|
|Middle East||193-199||197-203||172-182||+ 13.2|
|eastern Europe||69-72||68-71||58-60||+ 18.3|
|U.S. Gulf||65-70||65-70||60-70||+ 3.8|
|western Europe||69-75||69-75||65-69||+ 7.7|
|Far East||106-108||106-108||100-115||- 0.5|
|North Africa||211-224||216-228||216-220||+ 1.9|
|U.S. Gulf||208-210||210-214||194-197||+ 8.5|
|North Africa||169-175||173-178||164-168||+ 5.8|
|U.S. Gulf||170-177||173-179||145-149||+ 19.6|
|Muriate of Potash|
|eastern Europe||77-93||78-90||74-85||+ 5.7|
|western Europe||104-116||104-116||102-115||+ 1.4|
In China fertilizer import duty was reduced in early 1996 which, along with a reduced availability of arable land and a substantially higher demand for meat are the main forces stimulating the higher demand for fertilizers. In Vietnam new credit availability to farmers facilitated agricultural production and related fertilizer consumption. In Indonesia and Thailand balanced growth in fertilizer consumption is expected due to attractive agricultural commodity prices. South Asia constitutes the worlds third largest fertilizer consuming region and has shown considerable growth rates in recent years. Higher wheat and cotton prices in Pakistan and improved availability of domestically manufactured urea, have led to a 5 percent increased nitrogen consumption while phosphate consumption was adversely effected by higher prices. In India, in early July price support measures for DAP and MOP have been announced in an effort to revert the current trend to an increased share of nitrogen in total fertilizer consumption. Irrigation water shortages in Sri Lanka may reduce fertilizer consumption in spite of the earlier reintroduction of the fertilizer of the subsidy scheme. In Iran and Turkey fertilizer consumption is recovering after a considerable decline in 1993 and 1994 respectively. In the Islamic Republic of Iran provisions have been made for higher agricultural prices to compensate for the removal of fertilizer subsidies in 1990 while in Turkey fertilizer subsidies have been increased.
A modest but more fluctuating increase in fertilizer demand is expected in Canada and the United States due mainly to increased area under grains and oilseeds. The regional fertilizer consumption is expected to increase by between 4-5 percent.
In France the area planted with wheat increased due to a reduction of the set-aside area to 10 percent, which increased demand for fertilizer, while in Germany and Denmark adverse winter weather conditions caused lower demand for nitrogen fertilizer. Economic recovery and agricultural credit availability in Poland and Romania fostered agricultural production and fertilizer demand is expected to grow by 10 percent. In the former USSR agricultural production and fertilizer consumption are held back by a range of inter related problems in addition to reduced planting.
Lower crop prices and delayed agricultural credit availability in Brazil contributed to decreased fertilizer consumption in 1995/96. Adoption of new economic measures had a profound impact on agricultural production and fertilizer consumption in Mexico. Fertilizer import duties have been abolished, however, fertilizer demand and supply are as yet to stabilize. Severe drought in Argentina in 1995 stalled the rapid growth in fertilizer consumption recorded in 1994, prevailing high grain prices will make continued growth to 1.5 million tons not unlikely.
Fertilizer consumption in Africa is expected to increase from its current modest level of approximately 4 million tons nutrients. Favourable weather conditions in Morocco allowed the area under cereals to almost double and fertilizer consumption increased by 10 percent. In southern Africa fertilizer consumption, in particular in South Africa and Zimbabwe, is expected to recover after an extended drought.
A shift from beef and sheep farming in New Zealand to dairy farming increased the demand for nitrogen fertilizers. In Australia the area planted under cereals has increased and with it fertilizer use. Although phosphate consumption has declined, overall regional fertilizer consumption is expected to approach 2.5 million tons annually.
Recent international fertilizer spot price developments show increased prices when compared to one year ago. In particular nitrogen prices are rising again as the result of strong demand from Pakistan, India and China while DAP prices are sustained by large US exports to China.