Linked In
News In
Linked In

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

Growth in biotech seeds far to outpace that in fertilizers

Twitter Linkedin eCard

Fertilizer may be account for the biggest chunk of the $245bn agricultural inputs market, but biotech seeds will show far bigger sales growth, and some small markets offer even better prospects, Bank of America Merrill Lynch said.

Fertilizers, at $135bn, attract more than half the world spending by farmers on inputs, the bank said.

However, the markets long-term growth prospects are weak, at 2-3% a year through to 2018, with lower crop prices and farm income prompting some shrinkage this year.

"We anticipate fertilizer demand to trend down slightly in 2015," the bank said,

Overall, "additional capacity coming online and weak demand growth may limit upside to prices".

'Pose risk'

Indeed, in fertilizer, "capacity additions pose risk", BoAML said, flagging in potash plans to add 14.3mn tonnes in extra production potential by 2019, equivalent to an increase of 17.4% compared with the 2014 total.

Main ag input markets, and (long-term growth prospects)

Fertilizers: $135bn, (2-3%)

Crop protection: $57bn, (2-4%)

Biotech seeds: $21bn, (6-10%)

Conventional seeds: $19bn, (1-2%)

Professional products: $7bn, (2-3%)

Seed treatments: $3bn, (5-8%)

Microbials: $2bn, (10-15%)

Precision ag: $1bn, (10-15%)

Total: $245bn, (2-3%)

Source: Bank of America Merrill Lynch

"Global potash nameplate capacity expansions will outpace growing demand over the next five years," the bank said.

Meanwhile, in nitrogen, global capacity will rise by some 28.2m tonnes, or 13.5%, by 2019, led by China, and even assuming most of the 13.4m tonnes in North American capacity on the drawing board is not completed.

For phosphates, capacity will grow by 27.3m tonnes, or 10.6%, by 2019, at a time when extra projects already opened "could challenge industry discipline".

'Inflection point of accelerated growth'

However, prospects were better for biotech seed which, with sales of $21.1bn, was already $1.6bn bigger than the conventional seeds market.

The bank highlighted not only the potential for expansion of biotech in geographies which have yet meaningfully to embrace the technology, but also the introduction of fresh products, and farmers willingness to pay up for better seed.

"Since 1995, GM planted acreage has risen steadily and reached 442m acres globally in 2014," BoAML said.

"Importantly, the value of planted GM seeds continues to grow faster than the planted area."

Furthermore, the bank flagged the potential for gene editing, a technology it included under biotech, but which is less controversial, involving the modification of plants' existing DNA rather than the insertion of foreign strands.

"We believe that ag biotech is nearing an inflection point of accelerated growth due to the precision and capabilities of new gene editing technologies."

Small, but fast growing

But the bank flagged the potential for higher long-term growth still in the smaller markets of microbials and precision ag.

The market for microbials - which harnesses the likes of bacteria and fungi to promote the likes of plant disease resistance or nutrient uptake - is currently worth an estimated $1.5bn-2.5bn, but "expected to grow 10-15% per year through the rest of the decade".

Precision agriculture, a $1bn market, has potential for similar growth rates, thanks to promotion by the likes of Monsanto's FieldView scheme, DuPont's Encirca and the Precision Edge service offered by Canada's Farmers Edge.

Precision agriculture involves the close analysis of data on the likes of historical yields, soil moisture levels, the weather outlook and satellite imagery to improve farmers' ability to call right on key decisions.


Twitter Linkedin eCard
Related Stories

Dairy prices find calm at GDT, as investors await milk production signals

Skim milk prices correct their unexpected surge of the last session, while whole milk powder values avoid the tumble suggested by futures values

Will protein prices fight back against fat in dairy markets?

Prices of fats remain elevated against protein values in dairy - at a time when the opposite is true in markets for oilseed products

World phosphate, potash shipments to grow in 2018, helped by Chinese needs

Mosaic forecasts further demand expansion, as it heralds a "transformational year" for its own fortunes, after a 2017 marred by a one-time tax charge

Deere lifts sales hopes - even as it unveils biggest loss in 25 years

The maker of John Deere tractors flags "strengthening" market conditions, but swallows a huge writedown prompted by US tax retorms
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069