Gleadell Fertiliser Report

"Low demand and fast rising inventories have prompted some cutbacks in Urea production. Global nitrogen prices will continue to be driven by demand and all eyes will be on India and Pakistan over the next few weeks," said Calum Findlay, Gleadell Agriculture’s fertiliser trader.

"Current demand is in a vacuum enforced by the global credit crisis but both these two key Asian economies operate in a heavily subsidised environment and the situation today is unlikely to stop them purchasing the tonnage that their farmers require. Both have near-term demand and this will be followed by others who will also have to re-enter the market at some stage.

"In Europe we are starting to see a huge swing to Urea away from AN and if this continues to happen the opportunity that exists today on Urea could be short lived. Buyers expecting a further price correction may be wise to take some cover now as AN prices remain firm and the overall global supply situation still appears to be fairly tight.

"Phosphate and Potash requirements will be reduced but, with harvest 2009 projections still holding up, Nitrogen demand will remain firm." Mr Findlay added.