15 May 2013 17:18 [Source: ICIS news]
HOUSTON (ICIS)--Realising that weather is playing a big role in delaying North American fertilizer applications, Dutch financial service provider Rabobank said that despite the uncertainty for the Q2 2013 domestic markets, overall demand will start to rise and boost in global trading activity.
In a report released on Wednesday, and authored by Rabobank’s Food&Agribusiness Research and Advisory group, the bank states that despite a slow start to North American plantings a large crop is still expected in the US, especially in light of favourable future pricing for corn and soybeans.
The report also asserts that the normal refilling period of fertilizer for the fall will not be diminished despite the onset of an extended spring season.
There has been considerable discussion on not only how the weather delays might impact the amount of acreage devoted to the crop commodities but also in terms of what crop nutrients agricultural producers are going to select.
Increasingly there are sentiments within the corn segment that growers may forego ammonia and potash in favour of urea and nitrogen solutions as these two products can be applied post-emergence and still achieve desirable yields.
“Across most regions a financial incentive to maximise production will drive a large planting across the agri-commodity complex providing a largely neutral price outlook. However there are some uncertainties regarding policy which will ultimately impact market sentiment," said Dirk Jan Kennes, Rabobank analyst.
"In this landscape buyers will remain cautious but, nonetheless, at some stage global buyers will need to lock in fertilizer supply contracts,” Kennes said.
Looking at urea, Rabobank said that global urea prices have begun to decline. Citing factors such a delayed demand and field activities, there has begun to be an oversupply, which has caused a shift in urea and lead to it becoming more a buyers’ market.
In terms of phosphate, Rabobank said prices will marginally increase as several factors are setting up to limit overall demand. The report said that because of the high volumes of phosphate applied last fall, there is not going to be as much need or desire for this nutrient.
It also pointed out that due to the increased applications the past two years the ground is not as deficient in phosphate as would be present in soil levels during prior years. Finally the anticipated release of additional supply from China will limit the ability for phosphate’s price to rise.
Rabobank said the ongoing negotiations with Chinese importers, along with their Indian counterparts, are a primary factor in the reduction of international potash prices. The report states that India’s reluctance to apply potash has weighed on the ability of potash to climb in value within the market.
The rebound is likely only going to be seen in South America’s booming agricultural industry, and within parts of Asia, where increasingly strong agricultural economies are growing and will offset the lack of demand in the rest of the world.
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