At the beginning of the war in Ukraine the price of fertilizers skyrocketed. As then, most have returned to usual levels, with the exception of DAP, a fertilizer used for all types of crops. The next few weeks promise to continue to be tense, as China has just decided to limit its exports of DAP starting from December 1st.
630 dollars per ton is the reference price of the DAP in Ind. This is half less than in March 2022, but still much higher than the price prevailing before the outbreak of war in Ukraine and more than the price of other fertilizers, such as urea or potash.
According to some buyers, current prices are not really justified, especially since demand is calming down. It is affected by the decline in prices of agricultural products. A farmer who earns less buys less fertilizer or waits until the last minute to do so. Current wheat prices could, such as, push Europeans to consume less phosphates.
An uncertain global supply
What seems to be putting pressure on the markets is above all the level of global supply. TO UNITED STATESthe last three hurricanes have caused a decline in production at manufacturer Mosaïc. The company announced a loss of at least 300,000 tons of fertilizers, including DAPin the third quarter, but assured a few days ago that it will be able to reach its annual production targets.
There are also Chinese restrictions.Applied at the end of 2023, then revoked last April, they are back in force.Starting december 1, DAP export requests should no longer be accepted. It remains to be seen weather those who have already been validated will be able to do so Well pass all checks. The question also arises of the loading of thousands of tons stored with Chinese exporters or traders in the first months of 2025,around BraziltheAustralia or even theEthiopia.
Relief on the way from the OCP
The effect of the Chinese decision on prices will depend on its duration of implementation, which still remains unclear. But it is not likely to bring prices down.
What could give relief to buyers is the increase in power of the Moroccan giant OCP – Office cherifien des Phosphates, but we will still have to wait for all the announced investments to translate into production.
What factors are driving the persistent high prices of DAP fertilizer despite decreasing agricultural demand?
Interview with Fertilizer Market Expert: understanding DAP Prices and Global supply Dynamics
Time.news Editor (TNE): Thank you for joining us today. To start, coudl you explain the current situation with DAP fertilizer prices as the onset of the war in Ukraine?
Expert (E): Absolutely. At the beginning of the conflict, prices for fertilizers, including DAP, surged significantly. While most fertilizers have returned to their usual levels, DAP remains an exception.Currently, the reference price for DAP is around $630 per ton in India, which, although lower than the peak in March 2022, is still considerably higher than pre-war prices and exceeds the cost of other fertilizers like urea and potash.
TNE: What do you attribute this persistent high price to, despite decreasing demand for agricultural products?
E: The key factor here is the uncertainty surrounding global supply. Recent weather events, specifically hurricanes in the United States, have severely impacted production levels at manufacturers like Mosaic. They reported losses of at least 300,000 tons of fertilizers, including DAP, which adds strain to the market. Furthermore, the reintroduction of export restrictions from China starting December 1 adds another layer of complexity. This limits availability, despite some buyers questioning the justification for current prices given a calming demand.
TNE: Engaging. you mentioned China’s export restrictions. How do you anticipate these will affect global fertilizer prices?
E: The implications of China’s restrictions could be significant, but it really hinges on the duration of these limitations. While we don’t expect a drastic decrease in prices immediately, the uncertainty surrounding how long these restrictions will last is troubling for buyers.Existing export requests may face complications, and there’s still the question of large quantities of DAP stored with Chinese exporters potentially flooding markets in 2025.
TNE: Given the challenges in the market, are there any potential sources of relief for buyers?
E: Yes, there is a little hope on the horizon. The Moroccan company OCP – Office cherifien des Phosphates – is expected to increase its production capacity following significant investments. However, it will take some time before these investments translate into an increase in actual production. This could provide some much-needed relief to the market, but buyers should remain cautious.
TNE: What advice would you offer farmers and agricultural stakeholders based on the current fertilizer market trends?
E: Farmers should be strategic about their fertilizer purchases.Given the current high prices and potential future supply issues, it might potentially be wise to monitor market trends closely and take advantage of any dips in prices. Additionally,exploring alternatives to DAP,when viable,or considering different submission timing based on crop needs can lead to cost savings. It’s essential to stay informed about both local and international supply chain changes to make well-informed decisions.
TNE: Thank you for your insights. To wrap up, what can we expect in the coming weeks in the fertilizer market?
E: The market will likely remain tense, especially with the impending Chinese export restrictions. Watch for further developments from the OCP and how quickly they can scale up production after their investments. How buyers respond to the fluctuations in wheat prices will also be a key factor in the demand for fertilizers moving forward. In short, stay vigilant and adaptable.
TNE: Thank you for sharing your expertise with us today. It’s clear that the fertilizer market, particularly for DAP, remains highly dynamic and warrants close attention from all stakeholders.
E: thank you for having me. It was a pleasure to discuss this important topic.