Plop, Plop, Fizz, Fizz -- N Price Relief In Sight
One economist says retailers and growers can look for decling nitrogen (N) fertilizer prices later this year.
February 26, 2008
One economist says retailers and growers can look for declining nitrogen (N) fertilizer prices later this year.
David Asbridge, an economist with Doane Advisory Services, told attendees yesterday at the GrainWorld outlook conference in Winnipeg, MB, Canada, that N fertilizer prices should begin to decline later in 2008 after being pulled to record levels by world demand for grain for food and biofuels, according to a Reuters report.
Prices for all three major crop nutrients -- nitrogen, potash, and phosphates -- are probably at or near peaks, prompting producers to develop new capacity, he said. Growth in world capacity will outpace increases in demand for fertilizer, allowing inventories to build from current low levels.
"Once we get through the spring season, we should begin to see a little relief from high nitrogen prices," Asbridge said in an interview, according to Reuters. "If forced, I would say probably a year from now we may be $100 per ton on urea (nitrogen) cheaper than we are now," assuming there are no major changes to current world supply and demand fundamentals.
That would represent a 15 percent decline from current urea prices, Asbridge said, noting world demand for grain for food and biofuel will continue to keep prices relatively high.
"It's not going to happen very dramatically and we're not going to go back to the same low prices that we saw four, five years ago," he said.
Potash prices are also close to their peak, Asbridge said, noting it would take three to five years for new capacity expansions to come on stream in Canada and Russia.
Phosphate costs have soared in recent months because of tight supplies of sulfur used to make the fertilizer. U.S. sulfur prices have quadrupled in recent months, Asbridge said.
But in 2010, the largest phosphate plant in the world will start producing fertilizer in Saudi Arabia, he said.
"It may be that long before we get any phosphate price relief," he said.