Northern demand pushes fertiliser price

28 Aug, 2014 02:00 AM
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The indications we are getting is that demand is growing globally

GROWING northern hemisphere demand is expected to inflate global fertiliser prices in the months leading into harvest.

Industry is urging growers to consider prices and sure up their supply to avoid delays in distribution at seeding.

MacroFertil Australia WA regional sales manager Chris Puckridge said growing demand out of the northern hemisphere was expected to drive up the market across a whole range of fertiliser products in coming months.

"The indications we are getting is that demand is growing globally," he said.

"There is only so much manufactured around the world and seasonal impact in the northern hemisphere is increasing demand.

"At the moment there are great opportunities for growers to start looking at locking it in now while we have got price and supply security."

Mr Puckridge said while production of most items was solid, the number of outlets making more volatile products had reduced.

"There are certainly some countries where environmental laws have impacted on manufacturers and there are some products that are very difficult to obtain, particularly the high phosphorus products," he said.

"A lot of countries are very restrictive on the manufacturing of those products in populated areas."

CRT sales manager Natalie Adams said the global phosphate market could start to firm in coming months.

"Obviously we are in a known demand market right now, other parts are going to start coming back on to the market at the same time as us," Ms Adams said.

"That's not to say this price that we are seeing could be slightly elevated at harvest time, a lot can change in that time.

"But it is worth noting that our suppliers have got little inventory in sheds so everything that will be priced to you is going to be new cargo.

"If I was going to make a call I'd say your seeding fertiliser is going to be a very similar price to what you saw this year but prices have the potential to move up."

Ms Adams said the global nitrogen market was firm, with little activity occurring to move prices.

"It is a highly commoditised product, so treat it like a glyphosate," she said.

"My model when purchasing urea is buy them frequently, don't try and guess that you've hit the lowest price because you'll only be disappointed tomorrow.

"So buy small parcels more frequently and right at an average point.

"Don't feel you have to put all your eggs in one basket early."

Ms Adams said inventories were extremely low and products were selling out.

"There is a few days lag between a boatload arriving and the shed emptying out and the companies will continue to do that, and they will do it on purpose because they don't want to keep taking the risk, they want to sell out," she said.

"You've seen it with UAN this year, some growers have seen between 10 to 14 days delay. It's purely because we've had an increase in demand.Yes it's raining, crops are big and hungry but at the same time, none of these companies have the desire to stockpile and they will be manufacturing or ordering as close to the wire as they can."

Australian Fertiliser Service Association president Rod Abbott said growing international demand had the potential to effect fertiliser prices, but some products, particularly phosphates were at a relatively low point in the cycle internationally.

"So I suppose from that perspective there is more upwards than downwards pressure," Mr Abbott said.

"But none of the information that is available to me points at any increases."

Mr Abbott said it was likely international exchange rates would move local fertiliser prices.

"Fertiliser is denominated in $US so that means if we get a significant reduction in the $US/$AU exchange rate that will have a straight translation effect on fertilisers," he said.

"The dollar was falling last year at this time from $US103 back down to 93 cents.

"There has been something like a 10 per cent fall.

"At the same time, fertiliser prices internationally were coming back by a similar order of magnitude.

"The translation effect was relatively stable, whereas this year, I suspect that we might get a double whammy effect.

"That might be a small appreciation of $US fertiliser prices and potentially another currency change that could add up to make another retail fertiliser price change."

While he did not believe international prices would move much in coming months, Mr Abbott did feel there would be a move in translated Australian retail prices.

"The reality is Australia makes up such a small part of the international market, approximately 2pc of fertiliser internationally, that we don't have any influence on price," he said.

"So if one of the big players, India being the largest, decides to buy, they buy more in a few months then we buy in a year.

"They influence price by their buying behaviour, we don't."

Mr Abbott said the Australian marketplace continued to be relatively competitive due to the high number of suppliers.

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