Fertiliser prices are cheap now – but they might not be so in 6 months

At the recent ANZ fertiliser conference the overseas suppliers gave an overview of the industry generally, looking at supply and demand factors that have been and will have implications for pricing – one that caught my eye was this:

DAP price trend

This graph was produced by a company Argus Media, a very experienced fertiliser market commentator (subscription only).  If you really want to know on a daily basis what is going on in the fertiliser world, you should subscribe.

What you can see is that while the price of DAP has been falling for many months and perhaps there is room for them to fall a little further over the next 2-3 months, there are factors likely to affect the future pricing and they see the price going up again shortly.

Decisions made around the world by many groups affect farmers day to day  – you can see here that the price goes up and down but what is not obvious is what has caused the fluctuations.


Factors that affect price decisions

Many factors can affect price – sometimes quite suddenly.  When importers and manufacturers are making fertiliser buying decisions we typically have to assess 3 risk factors –

Commodity risk is chance of pricing going up or down – normal supply and demand factors –  and sometimes abnormal things – such as a country adjusting a domestic fertiliser subsidy. Fertiliser price subsidy changes in India have affected the ratio of N and P fertilisers sold in India over the last year – which in turn has affected the worldwide pricing of products such as urea and DAP since India is such a big importer and whether it enters a market or not hugely affects prices.

Currency risk is the chance that a currency will fluctuate sharply. Nearly all fertiliser trade is done in US$. Does that make much difference – it certainly can! Consider an Australian farmer buying 100 tons of DAP overseas as an example. Two months ago that may have cost him about A$54,945. Today, only allowing for currency factors, that same 100 tons would cost about A$51,800,  

Country (or Political) risk is usually the least risk  (in that it happens less frequently) but can have the greatest effect. Recently a virtual war has broken out in the MOP market as two significant export cartel partners fell out – UralKali and BelarusKali (together these 2 supply about 35-40% of the world traded MOP market). The situation has ended up with Russia cutting gas supply to Belarus by 25% (“pipe maintenance”) and blocking supply of Belarussian milk products to Russia (“contamination / safety”). In the meantime the Belarus have the Chairman of the (Russian) Uralkali export company under house arrest in Belarus… and they have started competing in the export market – look at the effect on the export price

MOP fob price movements


Typically potash is traded in 25-50,000 MT ship loads. Imagine how you feel as a fertiliser buyer – you fix the price with your supplier at the best price you can get at a certain moment and yet by the time the cargo arrives at your plant about 8 weeks later it is worth USD 1-2 million less!  No fun.


So spare a thought for your fertiliser company if they don’t always get their pricing just right for you. Balancing everything can be quite tricky…!


Chris Copplestone

Chris has more than 30 years working in the fertiliser industry, mainly internationally supplying raw materials and finished products to and from Australasia, Asia, Africa and former Soviet Union. Chris owned a sheep & beef farm in NZ for more than 10 years which generated his interest in developing modern fertilisers.

Chris is Managing Director of The Growing Group, developers of CarboPhos® and CarboUrea®

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