Pakistan floods devastate agriculture, fertilizer demand hit

04 August 2010 14:22  [Source: ICIS news]

LONDON (ICIS)--The flooding in northwest Pakistan, which has so far killed 1,400 people and affected 3m others, has also devastated rice paddy fields and severely limited interest in near-term fertilizer imports, sources said on Wednesday.

From an agricultural perspective, it had been expected that Pakistan would import upwards of 400,000 tonnes of diammonium phosphate (DAP) and announce further tenders for imported urea for arrival during 2010, but these plans have been put on hold due to the area’s worst flooding in 80 years, traders said.

“The floods have created a lot of damage to the agricultural belt of the country,” said one fertilizer importer.

“It's very difficult to ascertain the true extent of the damage, as water levels need to drop,” added the importer. “But the areas affected are major cash crop regions.”

The rice paddy has been the most seriously affected, with “major over-flooding” of the fields.

“Cotton has not been so badly affected, but we need to wait and see,” said the importer.

The importer added: “What is apparent is that farmer sentiment is very low. Fertilizer sales in the country are at very low levels and there is no traction in the market [to buy product].”

Traders had expected import demand for DAP to return in August in preparation for the rabi season, which gets under way in October.

But it was clear that, due to the previous lack of rain in the country, Pakistan’s DAP imports (currently around 480,000 tonnes for 2010) would lead to substantial carryover into the beginning of the rabi season.

This, coupled with the lack of demand during kharif (April-September) due to flooding, had led several traders to revise down their estimate of kharif demand to 400,000-500,000 tonnes.

With availability at 800,000 tonnes (imports plus domestic production during kharif), this would likely lead to a carryover of 400,000-500,000 tonnes into the rabi season.

Pakistan normally imports 1m tonnes/year of DAP but sources have revised down this estimate considerably.

“This [flooding] will delay interest in DAP imports,” said the trader.

Said the importer: “You would have to be crazy to import product now.”

Urea fertilizer sales had also dropped, said the importer, leading to speculation that Pakistan would not enter the import market again this year.

Said the importer: “More rain is expected in the next few days although the situation is easing – but it is early days.”

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