FAO/GIEWS - Food Outlook No.5, November 1998

FERTILIZERS

Spot prices of urea continued to decrease over the past few weeks, in particular in the Baltic and Black Sea markets. In the Near East, however, the reduction was marginal reflecting temporarily reduced supply capacity, which may have a stabilizing effect on prices in the coming weeks. In the short term, Turkey is one of the few countries expected to enter the market to meet its requirements for winter planting. In Asia, demand remains generally low reflecting the economic difficulties in the region and the effect of adverse weather on agriculture. In Viet Nam, although rice production targets are up for 1999, fertilizer imports are likely to be constrained by financial difficulties and export restrictions in Indonesia, its traditional supplier. China’s imports so far this season have reached only about 10 percent of the volume of last year. However, floods in southern China have affected domestic fertilizer production and stocks which may result in China returning to the market in the near future. The export restriction measures are under review. Demand for urea in Latin America remains generally strong.

Ammonia prices have changed little over the past few weeks However, as Ukrainian factories are switching production capacity to urea, reduced export supplies of ammonia may cause upward pressure on ammonia prices in the near future. In Europe, prices are likely to increase somewhat as a result of reduced supply capacity from Algeria where ammonia production has decreased. Ammonia prices in Asia remained generally stable.

Ammonium sulphate prices have continued their downward trend in comparison with prices observed in the same period in 1997. The price declines range between 18 percent less in Eastern Europe and 48 percent less in Western Europe. So far, this year Japan’s exports have risen by 6 percent compared to the same period in 1997. Thailand has shifted its source for imports with those from the Republic of Korea rising by 66 percent, while imports from Japan and the CIS have fallen by about 50 percent. Imports in Indonesia are so far at the same level as in the corresponding period last year.

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

SOURCE: Compiled from Fertilizer Week and Fertilizer Market Bulletin.
1/ From mid-point of given ranges.

Prices for Diammonium phosphate (DAP) remained stable in August and September and are between 3-6 percent above the corresponding period a year ago. Demand from Asia continues to sustain the DAP market. Demand in China is expected to be high because of the need to compensate for crop losses sustained during recent floods. DAP demand from India is uncertain; the DAP retail price has been deregulated and the impact on import requirements is yet unknown. DAP destined for India will meet demand in other markets such as Australia, Viet Nam and China. In western Europe DAP demand is low and it is decreasing in Latin America where the season for application is almost over. In the United States DAP production increased slightly compared to 1997. The expected slippage of September shipments to October due to hurricane Georges did not materialize. Demand in the US domestic market is low at present, but exports are expected to sustain prices at present levels.

Triple superphosphate (TSP) prices increased in September. Spot prices in North Africa are the same as last year while TSP prices in the US Gulf are 6 percent higher. North African exports are supplying markets in the Islamic Republic of Iran, Argentina, Brazil, and western Europe. Bangladesh is importing 20 000 tonnes from the United States, while at the same time Bulgaria is exporting considerable amounts of TSP to the United States.

International spot prices for Muriate of potash (MOP) have increased by 10 percent or more in both eastern and western European markets compared to the previous year, while they remain at the same level in the Vancouver market. MOP imports in Brazil may be affected by revised foreign exchange measures and domestic price increases. In India, MOP price controls have been imposed to mitigate farmers’ hardship caused by floods, drought and cyclones in various parts of the country. The MOP subsidy policy in Indonesia is at present under review. In France, demand for granular MOP has been low because of poor weather; consumption this year has been 5 percent lower compared to 1997.