The fertilizer market continues to feel the effects of fiscally conservative decisions by farmers.
According to Rabobank’s most recent quarterly report, there appears to be more than enough urea, phosphates, and potash for farmers around the world, from Illinois to India.
Here’s how Rabobank analysts describe the situation:
- Phosphates: “The current state of the phosphates market could best be described as lackluster. Demand is visible, but remains vulnerable.”
- Urea: “Significant urea volumes are still hanging over the market. Supply management out of China has allowed prices to recover. But in Rabobank’s view, this will not be sustainable and weakness within the market will show sooner rather than later.”
- Potash: “With contract prices settled at thin price increases in India and China, there is very little that can excite global potash markets.”
Back in the States, Rabobank sees a “careful tone” when it comes to fertilizer, thanks to bearish commodity prices and reduced corn acreage. “The overall tone for inputs use in the U.S. remains cautious,” the report says. “Farmers are shifting back to older seed varieties and buying in bulk to reduce costs.”
But they are still buying. The amount of U.S. fertilizer shipped in the first quarter of this year was essentially the same as the first quarter of 2014, according to Rabobank, which forecasts a “relatively neutral” market situation in the U.S. in the near future.
What are farmers interested in? Nitrogen. “Buyers in the U.S. Midwest are said to be keen to secure nitrogen volumes in the coming months for corn sidedressing and summerfill purposes,” says the report. “But as the U.S. is mostly out of season in (the second quarter), this will do little to support global price values.”
For growers worried about tight farm budgets and nitrogen loss due to heavy rains, though, sustained lower fertilizer prices could be welcome news as they seek to protect crop yields.