Downstream Inventory Update

December 7, 2012 06:37 AM

Retailer nutrient inventories are reported to be shrinking, and in some cases are completely depleted. Since the volatilization of fertilizer pricing in 2008, downstream suppliers are hesitant to keep too much nutrient on hand and continue to demonstrate a 'wait and see' approach to purchasing.

The challenge to the supplier is to offer nutrient at prices that reasonably reflect the market. Since the drought inspired runup in corn prices in the summer of 2012, dealers with little or no inventory on hand say they are "right where they want to be."

The danger is the potential supply/demand bottleneck that increased global demand for nutria could create here in the U.S. China is hinting at a winter purchase of Canadian potash, but demands pricing well below current market value. If China makes a buy, expect India to follow suit along with other Asian buyers.

Meanwhile, Mississippi River levels continue to decline making transport a genuine supply concern in the coming months. One retailer we surveyed reports zero inventory on hand with great difficulty finding fresh supplies. Downstream attitudes suggest this may become more common as time passes.

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