Agrium predicts crop momentum to continue benefiting producers

23 July 2013 21:35  [Source: ICIS news]

SAN ANTONIO (ICIS)--While opportunities in agriculture will remain at levels conducive to the fertilizer markets, there are still going to be challenges to meet the industry’s goal of expanding growth and increasing world food production, said Canadian fertilizer producer Agrium on Tuesday.

Speaking at the 88th Southwestern Fertilizer Conference, Agrium Chief Operating Officer Chuck Magro told attendees that the current crop appeared poised to make a substantial rebound from last year and carry the current momentum of agricultural demand forward.

Magro said the current conditions that are rated good to excellent are at or above a 10-year average, but it will depend on how hot it gets during the rest of the pollination period. The US Department of Agriculture reported on Monday that 43% of the corn crop was silking.

Producers are keeping watch on the progress as a successful harvest would set the stage for a healthy refill period. Recent sentiment asserts that could start the reversal in the declining trend in pricing.  

“The long term ag fundamentals are still strong, and we think they are going be strong for sometime but the path is not always going to be smooth,” said Magro.

“So we do expect to see yields significantly better than last year, the question is how good are they and how good will they be. Well that depends on the weather. Basically over the next four to six weeks, and I learned a long time ago not to forecast the weather.”

Magro said as growers become more successful, it gives them the ability to enhance their use of nutrients and in larger volumes. With predicted population growth, and related food demand, it is likely there will need to be 90m tonnes of incremental fertilizer growth to keep pace.

“You might ask yourself what is driving the stability of crop consumption? Well it is two things that this industry has been talking about for many years, global population growth and increased global income growth, and we expect this trend to continue for the next twenty years or so,” Magro said.

Although there is a primary fixation on corn, especially in North America, there is even more potential for industry sales growth in the segment of fruits and vegetables. Agrium predicts that while consumption of grains will increase by 500m tonnes over the next 20 years, the intake of fruits and vegetables will reach 900m tonnes.

“Fruits and vegetables are going to increase more than any of these crops. Why is this important? Well if you are a fertilizer producer or a fertilizer seller, fruits and vegetables take more fertilizer per application,” Magro said.

“I think as an industry we need to focus more on fruits and vegetables in that they will be a major driver for fertilizer growth demand,” he said.  

Magro said that although pricing for fertilizers has been volatile, and Agrium thinks that is going to remain, there is an opportunity for producers to maximise the price fluctuations as long as demand continues to grow. The company is forecasting growth rates for nitrogen at about 2.5%, phosphate at 3% and potash at about 4.2%.

By: Mark Milam
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