Flaman Rentals Blog

Fertilizer prices to drop a bit more - time to buy a big bin and fill it

Posted by Flaman Jun 29, 2016

Fertilizer prices will likely decline in the short-term then grow in the long term.  So ‘yes,’ buying a big bin now and filling it makes sense.

First of all, what proof of a price decline is there?  The downtrend is highlighted by a recent potash sale to India by Belarus (one of the very few potash producers) at the lowest prices seen in over a decade; about a third less than last year’s level as global supplies of the crop nutrient exceed demand.

About the deal - one of India’s biggest fertilizer importers, Indian Potash Ltd. (IPL), will buy 700,000 tonnes of potash at $227 (U.S.) per tonne on a cost and freight (CFR) basis.

Belarus’ contract price is likely to become the benchmark for other suppliers to India, such as Russia’s Uralkali and North American trading group Canpotex Ltd., owned by Potash Corp, Mosaic, and Agrium.

For background see this story.

The underlying thing from this is, China usually sets the floor or lowest global price for potash with their purchasing, so given the bigger annual’ish China deal is still outstanding, prices will likely decline even further.

India and China, the world’s biggest fertilizer consumers, usually sign contracts earlier in the year. This year, deals were delayed as high stocks held by farmers meant there was no rush to agree a deal.

India’s deal is a rare instance of the country signing a potash supply contract with a major producer before China.  For more information, see this story.

But then, on the upside, Belarus and Uralkali (the Russians) are looking at working together again on potash marketing , thus ending the price war that has driven down the price of potash.  These two and Canpotex (PotashCorp, Agrium, and Mosaic) basically dominate the world potash market.

And, the major trend to drive fertilizer prices in the long term is that the world is adding about 1-million people per week to its population.  We need to feed this additional million per week from the same amount of farmland – so, fertilizer demand will grow.

Now, currently, crop prices are growing faster than fertilizer costs, so things do make sense to buy now.


To take advantage of the temporarily low fertilizer prices, a Meridian fertilizer bin is your best choice. 
 
 
 
 
 
Posted in Ag news | Tagged with fertilizer meridian bin fertilizer prices | More articles by Flaman

Got a comment? We would love to hear it.