RSS
Twitter
Linked In
News In
News
Linked In
RSS
https://twitter.com/Agrimoney
http://www.newsnow.co.uk/h/Industry+Sectors/Agriculture

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

Potash prices to keep falling. But phosphate, urea outlooks firmer

Twitter Linkedin eCard

Potash prices, already at their lowest levels in eight years, look poised for further declines, undermined by Chinese dynamics which are not all so negative for phosphate and nitrogen nutrients, the AHDB said.

The UK-based crop bureau said that potash prices "continue to soften in most regions", hurt by "slow demand and currency volatility", with the weakness in Brazil's real, for instance, cutting the affordability of imported goods such as potash.

According to Credit Suisse, potash prices have fallen by 12% so far this year in the South East Asian market to $293 a tonne, and by 24% in Brazil to $280 a tonne.

Much of the decline has come in the past month, during which prices have dropped by 3% in South East Asia and by 5% in Brazil.

'Clearly in oversupply'

And "downward pressure [is] expected to remain a feature for the foreseeable future" for potash prices, the AHDB said, highlighted that the key granular muriate of potash product was "clearly in oversupply".

Selected fertilizer prices, and change so far this year

DAP: $408 a tonne, (-15%), FOB, Tampa

Potash: $293 a tonne, (-12%), CFR, South East Asia, standard

Potash: $280 a tonne, (-24%), CFR, Brazil, granular

Urea: $239 a tonne, (-25%), FOB, Baltic

Ammonia: $400 a tonne, (-27%), CFR, Tampa

NPK: $340 a tonne, (-7%), FOB, Baltic

Source: Credit Suisse

Meanwhile, on the demand side, the bureau noted a double whammy to hopes for orders from China from a weaker yuan, and from the reinstatement in September of a 13% VAT on fertilizer imports.

Chinese potash demand, "a sole bright spot" for the potash market for much of 2015, "should expect to feel the effects from the introduction of VAT on imports in China and from the country's currency devaluation", the AHDB said.

"China's potash demand and imports could be negatively affected."

'Could counterbalance each other'

By contrast, in the market for phosphate fertilizers - of which China is an exporter, but buys in some raw materials - the impact of the currency moves will be more mixed.

While the AHDB said that VAT increase could bring upward pressure on prices "due to higher Chinese raw material costs", the decline in the yuan "could weigh on global markets as it makes Chinese producers more competitive.

Indeed, the changes could "counterbalance each other", the bureau said, adding that they "should be watched".

Prices of diammonium phosphate (DAP), a key form of phosphate fertilizer product, have fallen by 15% so far this year in the Tampa export market, according to Credit Suisse, but prices of raw material phosphate rock are up by 7% in Morocco, the top exporter.

'Beginning to recover'

In the nitrogen market, the third of the big-three fertilizer sectors, urea prices, down 25% this year in the Black Sea market, may see some recovery, helped by a move by China's producers to hold prices, despite a "surplus" of nitrogen fertilizers in the country.

"In particular, there has been some intervention from the Chinese Nitrogen Fertiliser Industry Association, which has threatened penalties for traders offering product at prices lower than production costs," the AHDB said.

"Urea prices are beginning to recover gradually.

"While the upward trend in urea pricing is continuing to take hold, this will most likely be a modest recovery with only a slight increase in pricing over the fourth quarter of 2015 and into the New Year."

By Agrimoney.com

Twitter Linkedin eCard
Related Stories

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

Plant Impact agrees takeover by Croda, after failure of Bayer contract

The crop enhancement group, floored by the failure of a supply deal with Bayer, agrees a takeover by a maker of chemicals from anti-wrinkle creams to floor coatings
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© Agrimoney.com 2017

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