Food Outlook No.3 - July 2002 p.11

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Urea prices strengthened over the past two months (May-June) and the June average was about 8 percent higher than a year earlier. This development reflects the disappearance of previously ample supplies due to continuing strong demand during the period, particularly in the United States and Asia. In eastern Europe, prices increased for both Black Sea and Baltic origin urea. However, demand is not expected to continue as strong as in recent months with summer crop planting in the region now completed. In Thailand, urea demand is strong with the onset of the rainy season while stocks are low. Demand from Viet Nam is lower than expected, domestic demand in the south has come to an end and demand in the north is met from suppliers in Indonesia, the Near East and Bangladesh. India and China are scheduled to import modest volumes of urea, China reportedly re-exported

60 000 tonnes to the Democratic People Republic of Korea. The effect of recent changes in price interventions in India has the potential to stimulate imports in August and September to meet demand during the forthcoming Kharif season. Increased urea demand in Chile is met primarily from suppliers in Argentina, demand from Brazil is about normal for this time of the season. Urea granular prices in the United States increased and resellers continued maintaining increased prices in the expectation that demand would remain for urea application on rice and the approaching cotton season. Higher urea prices in the United States would provide again, however, export opportunities for Near East producers. Urea production in Canada declined considerably in the first half of 2002 compared to one year ago.

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

Change from
last year 1/
  ( . . . . . . . . . . . . . . . US$/tonne . . . . . . . . . . . . . . . . ) ( . percentage . )
  eastern Europe 88-90 91-93 85-86 7.6
  Near East 103-105 107-109 90-93 18.0
Ammonium Sulphate
  eastern Europe 44-46 44-45 50-54 -14.4
  U.S. Gulf 60-65 60-63 60-65 -1.6
  western Europe 55-58 55-58 70-75 -22.1
Diammonium Phosphate
  Jordan 161-164 164-166 158-160 3.8
  North Africa 149-155 155-159 136-147 11.0
  U.S. Gulf 153-156 160-164 134-136 20.0
Triple Superphosphate
  North Africa 121-127 122-126 118-125 2.1
  U.S. Gulf 132-134 129-131 119-123 7.4
Muriate of Potash
  eastern Europe 92-107 92-107 91-106 1.0
  Vancouver 111-123 111-123 111-130 -2.9
  western Europe 105-115 105-115 115-122 -7.2
Source: Compiled from Fertilizer Week and Fertilizer Market Bulletin. 1/ From mid-point of given ranges.
Prices for ammonia in Europe have increased since the beginning of this year by about 20 percent. Supplies are tight due to the continued closure of a major supplier in Algeria, relative high natural gas prices in the United States and export restrictions. Earlier strong demand for ammonia in Europe is over with the close of the summer crop planting season, while demand in the United States was adversely effected by inclement weather conditions in parts of the Corn Belt.

Prices of ammonium sulphate remained almost stable over the past two months and are about 22 percent lower than prices a year earlier.

Diammonium phosphate (DAP) prices continued to increase from May to June. The largest increase was noted in the US Gulf region, where June prices were about 20 percent higher than a year earlier. Tight supply in the US Gulf and strong demand from Mexico augmented by occasional spot sales to China point to continuing strong prices in the short term. China is importing DAP from Morocco and Tunisia. China also introduced changes in rock phosphate exports in an effort to promote domestic phosphate fertilizer production. In Pakistan import requirements for the Rabi season were met from Tunisia and the Russian Federation, while in India from Jordan and the Russian Federation. More imports are required to meet demand during Kharif planting. Demand for DAP from Latin

America is strong and involves a substantial volume of material. Mexico’s DAP imports will considerably increase compared to last year as current domestic production is severely constrained.

Prices of triple superphosphate (TSP) from North Africa and the US Gulf have been stable over the past four weeks. Prices from both origins lower than a year earlier, by 7 and 2 percent respectively. Average spot prices of muriate of potash (MOP) remained unchanged over the past two months and similar to those at the same time last year. Potash demand in Europe is again at about the same level as in 2000. Increased MOP imports in Thailand are driven by strong demand for compound fertilizers instigated by an early start of the rainy season. Increased potash imports by Brazil are expected in the second half of the year; potash application to date has been higher than a year ago.

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