FAO/GIEWS - Food Outlook No.5 - November 1999 p. 13

FERTILIZERS

Urea spot prices in international markets have remained under downward pressure in the past two months. Although urea supplies in the Russian Federation remain somewhat tight, all production units are operational again at full capacity after earlier disruption due largely to fuel shortages. Prices in the Baltic Sea are under pressure due to the recent increase in freight rates to Latin America. While demand for urea has remained weak over the past two months the outlook is for some improvement in coming weeks. Heavy flooding in Viet Nam has impeded seasonal demand for urea, but buying is expected to start in November. India has suspended urea imports, except for NPK blends, as stocks are high and demand is normally reduced during the monsoon season. Domestic production is targeted to increase to meet the demand for the Rabi season. Pakistan could enter the market in November, as urea is needed in December. In Indonesia most export licences have been issued for the fourth quarter, while domestic demand has not picked up yet due to lack of moisture for fieldwork. Although Turkey has high stocks and demand is low, it is importing urea as its only urea plant is out of operation since the earthquake in Izmit. Many Latin American countries are importing large quantities, mainly from the Black Sea and the Arab Gulf. The government of Mexico has delayed the imposition of an import duty on urea from the Russian Federation and the United States until next year and consequently demand has re-surfaced. Urea demand in the United States has increased for the current winter wheat planting season, and likewise, in Europe the winter grain planting season has started and many countries are testing the market, particularly for Black Sea urea.

Ammonia prices increased world wide due to a continued shortage of the product in the Ukraine and North and Latin America. Availability from Algeria has increased, as all plants are operational again. India will increase ammonia imports from various sources to meet demand resulting from an expansion in urea production. Demand from Asia, the Middle East, North Africa, western Europe and the United States is strong.

International spot market prices for ammonium sulphate in the U.S. Gulf are considerably lower than in 1998. However, by contrast, prices are about 35 percent higher in eastern and western Europe compared to a year ago. Prices in the last few months have been stable except in western Europe, where there was a decline.

Due to oversupply in the market diammonium phosphate (DAP) prices fell from August to October and were on average about 20 percent lower than a year ago. China's imports are less than in 1998 because of increased use of local produced NPK and a high level of stocks. Therefore this downward trend in international spot prices may continue. India and Pakistan have already covered their demand for this season. Extended import buying in India reflects the cost advantage of imports versus domestic products. Near East and North African suppliers have scheduled exports to Ethiopia, India, Iraq, Saudi Arabia and Thailand. The Russian Federation and Mexican suppliers are at present fully committed to export DAP to Australia, Pakistan, Viet Nam and some Latin American countries. The domestic demand for DAP in the United States is weak, inventory levels are high and production cuts are planned. However, exports have increased.

Prices for triple superphosphate (TSP) are down by 10-15 percent compared to 1998. North Africa exports TSP to Bangladesh, Brazil and the Islamic Republic of Iran. In France the TSP season has ended.

Muriate of potash (MOP) prices worldwide are slightly higher than a year ago, but for the last few months the prices remained stable. Potash producers continue to hold the market steady by cutting production until it is in line with demand. The CIS producers have scheduled exports to Bangladesh, Brazil, China and India. Demand in Europe and the United States is weak. The Philippines, Indonesia, and Taiwan have entered the market for considerable amounts.

AVERAGE FERTILIZER SPOT PRICES (bulk, f.o.b.)