Overseas influences affect fertiliser price

Farmers will have noticed an increase in their fertiliser costs.

The price of urea, di-ammonium phosphate (DAP) and sulphur has risen in the past few months, Ravensdown’s supply chain general manager Mike Whitty says.

Northern hemisphere and Brazilian growers’ seasonal demand for the products was strong at present.

When their season ended, that would determine what New Zealand saw in the following six months, he said.

"It will be interesting to see where the market is at that point.

"Until that period we will have strong firm markets that are likely to stay at this level or increase."

Mr Whitty said Covid-19 had disrupted international logistics and manufacturing economics.

Overseas demand for DAP had increased, which was compounded by a reduction in supply of the product from China.

Together, these factors had resulted in price increases earlier this year.

The story is similar for urea, where demand from American and Brazilian corn growers also affects the global price.

On top of that there is a shortage of shipping containers, which is increasing freight prices.

However, about 95% of Ravensdown’s product comes in on bulk vessels, so the co-operative has not been affected as much by the container issue.

It has a joint venture in Melbourne that manages bulk shipping, and it has contracts with suppliers for the remaining 5%.

Mr Whitty expected to see a change in prices as more fertiliser became available to the market later in the year.

"New Zealand’s strong dollar also helped offset a portion of the price increases.

"There will be a bit of levelling out for urea, but there are never any guarantees."

He said over recent months urea had increased by $US100 a tonne, plus freight, which translated into a 40% increase.

DAP had increased from $US310 to $US460 a tonne, (plus freight), which was an increase of 50%.

The price of Ravensdown’s urea increased by $20 a tonne to $NZ639 and DAP rose to $NZ849 a tonne.

He said in the past couple of years the prices of fertiliser had been low.

DAP producers had been losing money and they needed to get prices up.

Ballance Agri-Nutrients sales general manager Jason Minkhorst said the prices of DAP and urea had been steadily increasing during the past few months and continued to do so.

There were supply limitations for sulphur, because Covid-19 travel restrictions had reduced the global demand for oil.

Sulphur is a byproduct of the oil refining process.

He said although Ballance had been absorbing cost increases, it had increased its DAP price by $NZ50 a tonne, and urea increased by $NZ15 per tonne earlier this month.

"Commodities go through cyclical trends and we are in the midst of an increasing trend," Mr Minkhorst said.

He said Ballance’s locally manufactured fertiliser products were not affected so much by global commodity pressures.

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