Phosphate and Potash Fertilizer Market Continues to Improve, Price Trends Worth Watching
U.S. phosphate and potash fertilizer producer Mosaic released a report on January 4, stating that due to the favorable global agricultural environment, its phosphate and potash fertilizer performance in the second fertilizer quarter increased substantially. It also predicted that the market will continue to improve in the future, with phosphate and potash fertilizer supply remaining tight.
The report shows that the company's net income in the second fertilizer quarter, which ended on November 30 of last year, reached 1 billion USD; potash sales reached 699 million USD, up 69% from 414 million USD in the same period the previous year; potash sales profit reached 285.2 million USD, accounting for 41% of sales, compared with a profit of only 179.9 million USD in the same period the previous year. Potash operating income reached 251.5 million USD, compared with 150.6 million USD the previous year; phosphate sales were 2 billion USD, compared with only 1.3 billion USD in the same period the previous year. Mosaic said the increase in operating income was mainly due to higher selling prices and output. In 2010, the company sold a total of 3.7 million tonnes of phosphate fertilizer, with an average DAP price of 461 USD per tonne; potash sales volume was 1.8 million tonnes, with an average potassium chloride price of 331 USD per tonne.
The report shows that last year the global agricultural economic situation was favorable, and the broader market environment kept fertilizer demand strong, with producer inventories hitting a record low, laying the foundation for fertilizer sales. Prices of agricultural products including grains, oilseeds, fruits and vegetables all reached relatively high historical levels, sending a clear signal to growers worldwide——in 2011 they should expand planted area and use more new technologies and fertilizer products.
Huge demand will keep phosphate and potash fertilizer supply tight, and this will not ease until new production capacity comes on stream. Following strong demand during the fertilizer application season in North America and South America, U.S. producers reported inventories of only 488,000 tonnes of DAP and MAP as of November 30, and inventories have remained at low levels. North American potash producers reported inventories of 1.6 million tonnes, only half of last year's level and 20% below the average inventory of the previous three years.
Mosaic estimates that global phosphate fertilizer shipments will rise to 57 million tonnes in 2010, and this figure will reach 59 million to 61 million tonnes in 2011. Under the current favorable market conditions, India's DAP demand is expected to increase by 5% from 2010 to 2012. Other major fertilizer markets, including North America, Europe, Oceania and several countries in Asia, will all see substantial increases in agricultural output, driving higher fertilizer sales. Global potash shipments increased by 59% in 2010, reaching 49.7 million tonnes, and this figure will rise further to 53 million to 56 million tonnes in 2011. Potash demand will increase in all major consuming and importing markets, including the United States, Brazil, China, India and other Asian markets. Brazil's potash imports in 2011 will grow to 6.5 million to 7 million tonnes, while China's will reach 6 million to 6.5 million tonnes. India's demand for potash will also push its imports to a record high, at between 6 million and 6.5 million tonnes.
Mosaic's president and CEO said, “The global grain market is continually proving to growers that fertilizer input is the most effective measure for increasing yields.”