Fertiliser price growth spurt

Global fert prices rebound, but Aussie farmers spend up


Agribusiness
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A big fertiliser price jolt may be felt by livestock producers caught by a potential superphosphate shortage

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An end of year kick in fertiliser prices has sent values jumping at least $100 a tonne above last year’s historic lows, but farmers are still benefiting from a unusually tame market ahead of this year’s cropping season.

Urea values may even dip for a third winter in a row, in time for the crop top dressing season.

The biggest price jolt could be felt by livestock producers caught by a possible autumn shortage of superphosphate.

The surging wool market has added extra momentum to grazing sector demand for fertiliser on top of several years of increased pasture nutrition attention by beef and lamb producers chasing high red meat values.

“Come autumn we’re going to be pretty busy – I wouldn’t be surprised if demand outstrips supply,” said NSW Southern Tablelands and Hunter Valley contractor, Paul Wyer at Fertspread.

A trebling in livestock-related commodity values in the past five years had beefed up farm bank accounts and subsequently prompted a significant increase in fertiliser use.

Super in demand

While many producers had booked in their “super” requirements, taking advantage of some pre-Christmas discounting deals, Mr Wyer said those leaving their run too late could find it harder than normal to secure supplies or spreading services.

The Australian Fertiliser Services Association (AFSA) is also tipping a price jump for single superphosphate following recent global phosphate price rises.

Single super is currently costing about $310/t at port – similar to its retail value a year ago.

However, AFSA president, Craig Swan, said a correction was due as bulk import contracts were renewed.

Compound fertiliser lines such as diammonium phosphate (DAP) rose swiftly from wholesale values of $425/t in September to more than $500 by December, and were now worth up to $660/t (retail) at Australian ports.

The international price leap was partly triggered by US giant Mosaic’s closure of its 53-year-old 2 million tonnes a year capacity Plant City facility in Florida, which suddenly reduced export volumes.

Phosphate exports from Morocco have also been slower to ramp up than expected and Chinese suppliers have cut exports to focus on healthier domestic margins.

World demand is expected to grow in 2018-19, but at a slow pace compared with historical trends - International Fertilizer Federation

Mr Swan, a South Australian supplier from  Meningie, said after last year’s decade low fertiliser prices, the market had settled about mid-range on trends in the past 10 years.

While some manufacturing ingredient shortages, notably zinc and phosphoric acid, also contributed to November’s price leap, the Australian dollar’s recent rise was helping restrain import costs.

Global growth slows

Meanwhile, sluggish global grain values are likely to keep fertiliser demand and prices in check in 2018.

The International Fertilizer Association (IFA) forecasts demand worldwide will grow less than 1pc in 2017-18, to 190.7m tonnes.

Its latest outlook report noted “persisting low prices for most crop commodities and increasing emphasis on more efficient use of mineral fertilisers and greater recycling of organic nutrient sources”.

“World demand is expected to grow in 2018-19 (to 192.5m tonnes), but at a slow pace compared with historical trends,” the IFA said.

It also highlighted while 2017 production output was “subdued”, more investment in fertiliser supply continued in Africa and Asia and large capacity increases were tipped in 2018.

Phosphate business vice president with big Australian manufacturer and distributor, Incitec Pivot Fertilisers, Scott Bowman confirmed southern Australian interest in single super in pasture markets and ammonium phosphates for cereals had been “particularly strong” despite recent price increases and patchy weather conditions.

We continue seeing farmers very aware of the need to invest in fertiliser to get the production they expect. - Damian Heath, Wengfu Group

He said urea prices had been quite variable, reflecting recent changing global demand, but the AFSA’s Mr Swan said despite rising from lows of $345/t last year to about $450/t at port now, the cycle may again favour farmers.

“The Australian market has really enjoyed the low side of the urea cycle for the past two years and we could see it come down again, maybe to around the $400 mark later in the season,” he said.

Optimistic mood 

Optimism in numerous agricultural markets and competitive fertiliser prices had driven solid demand across all commodity categories according to Australian chief executive officer with Chinese fertiliser and chemical giant, Wengfu Group, Damien Heath.

“From a demand perspective last year was very good because the big crop in 2016-17 used a lot of nutrients – we continue seeing farmers very aware of the need to invest in fertiliser to get the production they expect,” he said.

“Admittedly seasonal conditions have been patchy in areas like central and northern NSW, but in general, despite the weather, the market does still feel quite positive.”

Most retail distributors had locked in substantial orders by December and were now waiting to see the extent of an autumn break before committing to more.

Wenfu supplies up to 20pc of the south eastern fertiliser market between Brisbane and Adelaide.

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