Business analysts at Yara UK have been closely monitoring the significant increase in global demand for fertilizer during 2007 and believe it will continue to impact prices and supply in 2008. The main drivers have been the need for increased food production worldwide, particularly in areas like India and China, and the rapid rise in biofuel production, notably in Brazil and the US. Global grain production is not keeping pace with demand and global grain stocks are declining year on year.
The resultant surge in fertilizer demand in these markets, combined with continued high energy prices, has inevitably lead to increased phosphate, potash and nitrogen prices as supplies are stretched to meet this demand.
The UK market has already felt the effect of these rises with autumn PK grades trading at much higher levels and Steven Chisholm, Yara UK Business Manager for England and Wales, believes that this trend will continue: "Prices for NPK in the spring will inevitably be up on 2007 levels and, as such, it becomes ever more important to ensure value for money. The most effective way is by using good quality fertilizers, with guaranteed analysis and accurate spreading characteristics."
In 2007, the early and dry spring, together with farmers' late ordering pattern, led to a huge rise in demand during March and April: this caused significant distribution problems across the industry, as the supply and transportation systems struggled to cope. As a result, a number of farmers did not receive their fertilizer at the time they requested. The same potential problem exists for spring 2008 with the added problem of extra nitrogen to deliver to the arable sector where more wheat and rape are expected to be drilled this autumn.
"Our best advice for farmers," concludes Mr Chisholm, "is that, with price rises being inevitable, and logistic delays possible, they should plan their fertilizer purchases early, focus on quality to derive best value for money - and not to wait until the last minute to take delivery."
