FAO/GIEWS - Food Outlook No.3 - June 2001 p. 14

Fertilizers

Urea prices decreased somewhat over the past two months and average May prices were between 12 and 25 percent lower than a year earlier. The downward trend in urea prices is expected to continue throughout the summer. Prices for Black Sea origin urea increased due to tight supply and production cutbacks. However, a shortfall in production from Ukraine could be met by increased exports from Venezuela. The Baltic Sea region is supplying urea to Latin America and Africa. Near East suppliers committed their export availability to South East Asia and Africa. India has not imported any urea since January 2001. Viet Nam has entered the market for 110 000 tonnes and might book another 100 000 tonnes for June. Government pressure to keep the domestic market well supplied has caused export shortage in Indonesia. Urea demand in the United States is slow and inventories are high. Production is expected to decrease, while production costs will increase due to rise in gas prices. Mexico's import requirements for May and June are estimated at

100 000-150 000 tonnes per month. Other Latin American countries are entering the market. Australia has suffered severe drought, and despite some recent rainfall more is needed before the season can start. Drought also resulted in high stocks, thus imports are estimated at 70 000 tonnes for the first quarter (50 percent of last year).

Prices for ammonia have decreased since the beginning of this year by about 50 percent. Only in the Black Sea region prices have risen over the past few weeks by approximately 8 percent as there are production cutbacks in western Europe and the Ukraine. Spain and Greece have entered the market. Indonesia is meeting the demand in Taiwan. The United States closed a plant and is importing from Venezuela, the Black Sea and Trinidad. India is importing substantive amounts.

Average Fertilizer Spot Prices (bulk, f.o.b.)

Prices for ammonium sulphate remained mostly stable over the past two months focussing on the forthcoming demand from Brazil. However, compared to a year ago, prices are up by about 26-42 percent, except for the Far East where prices rose only by 10 percent.

Diammonium phosphate (DAP) prices remained virtually unchanged during April and May for Jordan, but fell by 6-7 percent in North Africa and the U.S. Gulf. This trend may continue, because supply-demand fundamentals remain out of balance. The oversupply situation resembles the one in the mid 80s. However, the prices are somewhat higher than a year ago. There is a build-up of inventories in the CIS countries, North Africa and the United States. India has already imported 200 000 tonnes DAP and intends to import some more from Jordan and the United States. In China, closing stocks are estimated to be 350 000 tonnes as the season comes to an end. In Pakistan inventories are high and demand remains slack due to drought followed by unexpected rains in wheat growing areas resulting in crop damage. The Philippines are importing 40 000 tonnes from the United States. In Viet Nam offtake is slow. DAP demand in Europe is weak. Turkey is expected to tender for 130 000 tonnes to perhaps 250 000 tonnes. Morocco has export

commitments to India and Thailand. Demand for DAP from Argentina is slow as there are high inventories. Mexico and Peru have entered the market. The United States has reduced consumption because of wet conditions and delayed seasonal applications. Inventories are high and some producers face warehousing difficulties.

Prices of triple superphosphate (TSP) from North Africa and the U.S. Gulf were stable over the past 2 months. Prices from both origins are about 1 percent to 8 percent lower than a year earlier. Bangladesh is importing TSP from Tunisia and the Islamic Republic of Iran from Lebanon, Morocco and Tunisia.

Average spot prices of muriate of potash (MOP) remained generally stable over the past two months. Average May prices in all three regions were slightly less than a year ago. China, India and Brazil had high carry over stocks. China reportedly entered the market for 165 000 tonnes. Indonesia is importing 100 000 tonnes of MOP from Jordan. India intends to import 40 000 tonnes. In Malaysia domestic demand is 25 percent below the one last year. The major Canadian and United States producers have instituted shutdowns for the summer to keep supplies in balance and hold up prices.