Food Outlook No.4 - October 2002 p.12

Fertilizers

Spot prices of urea from most origins in international markets declined over the past two months. September prices in eastern Europe were unchanged from those a year ago but those in the Near East remained well above the same period last year. Urea inventories in the Black Sea Region are declining slightly, but remain ample in the Baltic Sea Region due to shipping constraints. Prices are therefore expected to remain around the current level in the near term. Expected demand for urea in Sri Lanka, The Philippines and Viet Nam may be met through supply from Near East suppliers as Indonesian export capacity is limited for the remainder of the year. Exports from Egypt are scheduled for the European market. Demand from Latin America is uncertain and hampered by increasing freight rates. Chilean demand is likely to be met from Venezuelan and Argentinean sources. Stocks in India and Pakistan are high in anticipation of the winter planting. Expected demand in the United States is almost in balance with expected supply from domestic sources and imports mainly from Canada.

Ammonia prices increased in September. North African supply capacity was temporarily lower. Demand in south and northwest Europe was met from eastern European suppliers. Ammonia prices in the United States also increased following the European trend. Also ammonium supply from the Caribbean was temporarily constrained, which effected prices in Latin America. Strong demand is expected from South Africa and the Near East phosphate fertilizer product manufacturers. Ukrainian producers diverted ammonium for urea production to meet their ammonium supply obligations as well as in response to higher ammonium prices.

International spot market prices of ammonium sulphate are considerably lower than in 2001, and prices converged in eastern and western Europe contrary to last year. Prices in the past few months have increased in response to strong demand from China and Malaysia.

Diammonium phosphate (DAP) prices increased slightly in September but bounced back somewhat in the US Gulf. Spot prices in all markets are 15-20 percent higher compared to the same period last year. Import demand in Latin America is uncertain. Seasonal demand in India is augmented by imports from the United States and the CIS. United States suppliers also met Pakistan DAP demand. These United States exports, in addition to strong domestic United States demand, contributed to increased DAP spot prices from the US Gulf region. Increased DAP manufacturing in the United States had a price levelling effect in the United States market. DAP supply capacity from North Africa and Jordan in the near future is limited. Strong demand from Viet Nam is expected to be met from various suppliers in Asia, Australia and North Africa. In Europe seasonal demand is strong, supply originates from North African and eastern Europe. The present trend in international spot prices may continue until China enters the market in the fourth quarter.

Muriate of potash (MOP) prices in eastern Europe and North America are almost equivalent to one year ago, the market has been weak during recent months. Potash producers continue with mine shutdowns to maintain supply in balance with demand. Supply capacity from eastern Europe is scheduled to increase in the near future. Demand from India was adversely affected by droughts and in Brazil by political uncertainties. Demand from China is low as earlier imports catered for adequate supply. Demand in other Asian countries- Pakistan, Viet Nam, Malaysia and Indonesia, is strong. Seasonal demand in Iran is scheduled to be met from Near East producers.

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

Source: Compiled from Fertilizer Week and Fertilizer Market Bulletin. 1/ From mid-point of given ranges.