FARMERS have stocked up early and heavily on fertiliser for this year's cropping season after global prices sank to their cheapest point since the global financial crisis.
But the surge of discount-frenzied forward orders in November and December has since triggered a sharp price rebound sending phosphate product values up as much as $150 to $200 a tonne after Christmas.
After almost two years of gradually dipping phosphate values, the return to significant knee-jerk volatility in the fertiliser sector has highlighted deep problems with Australia's "cheap and disappointing industry approach to soil nutrition" according to supply company boss, Jim Mole.
"The boom and bust pricing trends are exacerbated by farmers conditioned to think primarily about getting cheap prices rather than planning long-term," said Mr Mole, the managing director at Impact Fertilisers.
He said the supply chain had also locked itself into a "price and volume mentality" in the past 20 years, focusing on getting customers through the door rather than working smarter to promote product value or better farm fertiliser strategies.
"Profit margins have subsequently become so small we've seen a marked decline in specialist expertise available to our customers or focusing on product innovation," he said.
"One of the most disappointing things about these latest high prices is that suppliers and retailers won't be making any more money from the market going up than they were when it was down."
Mr Mole said Impact had locked in about three times more forward orders this winter cropping season than a year ago and other companies had imported a lot of early cargoes, too.
"Yet despite all this market activity, there's little money being retained to build value within the industry or for our customers," he said.
Prices shot up about 40 per cent over seven weeks in summer as Australian farmers jumped in to take advantage of global di-ammonium phosphate (DAP) prices drifting to lows near $US360/t in November.
The rush to cash in on the cheapest market since 2009 coincided with an lift in buying interest from Brazil and some phosphate export hiccups in North Africa, all combining to send world DAP and mono-ammonium phosphate (MAP) prices spiking around $US500/t by February.
"Unfortunately nobody carries much inventory these days so if you get a sudden demand spike or supply congestion there aren't stockpiles available in Australia or overseas to provide a price buffer," said Incitec Pivot Fertilizers chief operating officer, James Whiteside.
He believed croppers were actually more aware of the need to plan ahead and commit to orders two or three months before the sowing season, "rather than sit on the fence too long" and risk getting caught by a lack of supplies in the country.
"The best thing farmers can do is talk to their dealers, but this time demand really bounced and prices responded, significantly reversing the market characteristics of the past year."
A falling Australian dollar in late 2013 added to import costs.
Mr Whiteside said urea prices were even more volatile than phosphate and the world was nervously watching political activity in Ukraine, a big producer of urea from Russian gas.
Victorian retailer and service supplier Shane Dellavedova, Maryborough, said selling fertiliser was a "high risk business, with not much margin", but doing the job effectively involved servicing a whole package of farmer needs including soil testing, mapping and application.
While more speciality fertilisers were emerging to add value to the industry's offering, he said not all new products were advantageous to every customer's farming environment.
Landmark's fertiliser procurement manager Paul Lomax said the MAP and DAP market had softened lately, down from retail peaks of $730/t to $750t at the depot to about $710/t.
He said about 10 to 20pc of the winter-crop market volume remained to be sold.
Unlike last year when Landmark sold 80pc of its fertiliser for the season in a frantic six days in late February-early March, he estimated this season's rush of December-January orders had satisfied almost 90pc of croppers' sowing period needs even though prices kept rising to about $40/t above values in early 2013.
Mr Lomax said recent rain in eastern Australia would help stimulate greater demand for the winter-autumn period especially in areas hurt by drought last season.
Although 2013 had still been a solid year for fertiliser sales, with product volumes of 5.5m tonnes up from 5.2m in 2012, it might have been higher if the summer cropping season hadn't withered.