FAO/GIEWS - Food Outlook No.5 - November 2000 p. 13

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Urea spot prices in international markets declined in August and September, but recovered somewhat in October due to a short-term tightness in availability. Average October prices were between 50 and 70 percent higher than a year ago, with most of the variation in current prices accounted for by the differing freight charges according to origin. Price developments in the urea market have been relatively calm pending the outcome of a major Indian tender for 100 000 tonnes, in particular producers in the Arab Gulf are awaiting the results of this tender.

Urea supply from the Russian Federation is somewhat tight with production units operating at an estimated 70 percent of capacity. Immediate availability will be lower from November onwards due to the seasonal closure of the river transport system. Urea prices from the Baltic Sea region are among the most weak in the current market and face competition from Arab Gulf suppliers and possibly China. Prices may rise when demand for urea in the Mediterranean region increases and puts pressure on international markets in general.

Heavy rains and flooding in Vietnam delayed this country's normal urea applications leading to slow off-take and high inventory levels. In addition, the local currency has fallen against the US dollar making imports expensive. However, domestic demand for urea is expected to strengthen in November/early December. Domestic urea production in Pakistan will be adequate to meet demand for the next Kharif season and no imports are envisaged at this stage. Indonesian urea export availability might be higher during the fourth quarter since prices strengthen as seasonal buying interest from other Asian markets increases. Demand for urea in Turkey is low due to lack of rains in the past months: imports have been only some 30 000 tonnes. Indications are that China is likely to become a permanent urea exporting country. However, in the near term, its exports may somewhat decrease from their previous pace to augment stocks to meet domestic demand in the next planting season. In Latin America, many countries are importing large quantities of Urea, mainly from the Baltic and the Black Sea regions. Urea demand from farmers in the United States is modest this autumn compared to last year.

Ammonia prices increased worldwide over the past two months due to tight availability from all the main sources. India is set to increase ammonia imports from various sources to meet demand to expand urea production. Demand from Asia, the Middle East, North Africa, West Europe and the United States is strong. Ammonia imports in Mexico and the United States may increase due to the high cost of gas for domestic production.

International spot market prices for ammonium sulphate in the U.S. Gulf are considerably higher than in 1999. Ammonium sulphate prices in eastern and western Europe, however, are about the same level as a year ago. Prices in the last few months have been stable.

Average Fertilizer Spot Prices (bulk, f.o.b.)

    2000 1999 Change from
last year 1/
September October October
  ( . . . . . . . . . . . . . US$/tonne . . . . . . . . . . . . . ) ( . percentage . )
eastern Europe 105-109 113-116 66-67 + 72.2
Near East 128-130 133-139 87-91 + 52.8
Ammonium Sulphate        
eastern Europe 42-45 41-44 42-45 - 2.3
Far East 61-64 63-66 65-66 - 1.5
U.S. Gulf 47-51 48-52 35-37 + 38.9
western Europe 55-60 55-60 55-60 0
Diammonium Phosphate        
Jordan 175-182 176-182 165-174 + 5.6
North Africa 179-185 178-184 168-176 + 5.2
U.S. Gulf 166-168 160-163 152-154 + 5.6
Triple Superphosphate        
North Africa 131-135 130-135 136-139 - 3.6
U.S. Gulf 138-142 136-141 140-145 - 2.8
Muriate of Potash        
eastern Europe 92-111 92-111 98-112 - 3.3
Vancouver 117-131 117-131 118-131 - 0.6
western Europe 115-122 115-122 129-137 - 10.9

Due to a heavier demand from Pakistan and temporary lower disappearance from the United States diammonium phosphate (DAP) prices increased from August to October in Jordan and North Africa. DAP prices fell in the U.S. Gulf and were, on average, about 5 percent higher than a year ago. The market in China remains weak, stock levels are high and the bulk of the winter grain planting has ended. Pakistan is purchasing large quantities and the government has decided not to levy any duty on imported DAP. In India, DAP inventories are increasing due to lack-luster demand as low domestic wheat prices are turning farmers away from wheat production. Suppliers in the Russian Federation and Lithuania have scheduled exports to western Europe and Ethiopia. Bangladesh arranged DAP imports from Australia. The planting season in Latin America is over. The domestic market for DAP in the United States has been relatively quiet as the main winter wheat planting season has been hampered by dry conditions. Recent rains could lead to a pick-up in the market. The United States export market remains stable as well except for lower deliveries to China.

Prices for triple superphosphate (TSP) in October are down by 2 to 3 percent compared to 1999. North Africa exports TSP to the Islamic Republic of Iran.

Muriate of potash (MOP) prices in October are about 3 to 10 percent lower worldwide than a year ago, and remained stable in the last few months. Potash producers continue to hold the market steady by matching production in line with demand. Jordan is supplying China with 400 000 tonnes, up 22.8 percent compared to 1999. Demand in Europe, Latin America and the United States is weak. India, Malaysia, Pakistan and New Zealand are scheduled to import MOP in this quarter.

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