FAO/GIEWS - Food Outlook No.3 - June 1999 p. 7

FERTILIZERS

Urea prices weakened somewhat between March and April and remain between about 18 and 34 percent lower than a year earlier reflecting generally ample supplies for the current level of demand. Prices fell particularly among the countries of the former USSR. The Russian Federation imposed a 5 percent export duty on nitrogen fertilisers and some manufacturers ceased production. Urea prices in the Baltic Sea region are stable and producers are selling urea for June delivery. A recent shortage of product in the Black Sea region coincided with a period of low demand and prices hardly fluctuated. Black Sea producers have been supplying urea to Italy and Turkey. Near East suppliers committed their export availability to Australia, Argentina and Thailand, and smaller volumes to meet demand from nearby countries. India issued a tender for 25 000 tonnes of urea in anticipation of eventual government authorization to import possibly 100 000 tonnes. Viet Nam has entered the market although domestic demand is

slow, as is normal, at the beginning of the rice-planting season and stocks are high. Indonesian producers exported 24 percent less urea in March compared to 1998. Implementation of the decision to abolish subsidies will increase the domestic urea price and affect demand. Urea availability in the United States is higher than last year; end-March stocks were reported to be almost one-third more than those a year earlier. Increased domestic production and relatively high imports are satisfying, demand and prices are stable.

Prices for ammonia have decreased since earlier this year due to slacker demand and in April were about 20 percent less than a year earlier. However, availability may tighten when producers in the Black Sea region restore urea production and if demand from Asia continues. In addition, Mexico has suspended ammonia exports until mid-1999 due to a technical production problem. In April U.S. Gulf prices for ammonium sulphate fell by about US$5 per tonne from March to about 66 percent below those of a year earlier. By contrast, however, ammonium sulphate prices from most other origins increased in April and were above the previous year's levels. Turkey and India are active in the market to arrange imports of substantial amounts of ammonium sulphate.

Diammonium phosphate (DAP) prices fell slightly from March to April and are about 5 percent lower than a year earlier, largely reflecting problems facing Indian importers. Indian contracts for DAP imports are a key influence for international DAP prices but a cut in import subsidies and the devaluation of the Rupee are hampering foreign purchases. Imports from the United States are currently on hold. As a result of the reduced imports and a cut back in domestic DAP production, severe DAP shortages are reported in the country. China imported 1.8 million tonnes of DAP in the first quarter of 1999 and stocks are reported to be high. A rush in domestic demand for the spring season in the United States from the eastern Corn Belt may reduce inventories, but demand is slow to pick up in the Southern Plains and the Midwest due to rain. In Europe the season for DAP is over. Morocco has export commitments to Pakistan and Ethiopia. Jordan producers have scheduled exports for Malaysia and Ethiopia. Argentina and Brazil have entered the market for substantial amounts of DAP, but the restricted availability of credit hampers purchasing in Brazil.

Prices of triple superphosphate (TSP) from North Africa and US Gulf have remained stable over the past four weeks. Prices from both origins are about 4 to 5 percent lower than a year earlier. Iran imports about 60 000 tonnes from Tunisia. The French market for TSP is uncertain, domestic TSP prices declined during the year.

Average spot prices of muriate of potash (MOP) remained unchanged in April. Compared to April 1998, however, prices are about 15 percent higher in eastern Europe. In addition to the 1.6 million tonnes of imports secured earlier in the year, importers in China await the issuance of import quotas. In the United States, potash demand increased at the beginning of cotton planting. Low crop prices may affect potash demand. MOP consumption in India increased from 2.15 million tonnes in 1997/98 to 2.6 million tonnes in 1998/99. Imports have been suspended pending a decision on subsidies. Regular demand for potash in Brazil, Bangladesh, Malaysia, the Philippines, and Turkey may support present levels of potash prices.

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