Stronger fertilizer demand projected through 2012
In nitrogen, purchasing patterns were markedly better than those of the other nutrients. After the general slowdown in fertilizer markets late in 2011, nitrogen buyers moved quickly to place new orders—buoyed by the prospect of large US corn plantings and concerned about product availability given a reduction in North American import volumes and certain unplanned domestic plant outages. These tight supply/demand fundamentals were most pronounced in urea, which pushed prices higher during the quarter.
Although demand early in the season was lackluster, officials at Mosaic Co. said demand was rapidly accelerating. Mosaic explained the force driving the demand for fertilizer is the relatively high corn crop prices.
“We anticipate another year of high farm income in North America—the second highest on record—and strong farm economics around the world,” Mosaic CEO Jim Prokopanko said in a statement.
Part of the reason for the expected high demand is that fertilizer dealers are now beginning to secure product to meet strong demand at the farm level, according to PotashCorp. While the initial focus for many was on acquiring nitrogen to meet their immediate requirements, purchasing of potash and phosphate products accelerated going into the second quarter.
Dealers have largely worked through existing potash inventories and are purchasing additional volumes for immediate needs—an important transition with key growing regions in the midst of their primary planting seasons and farmers motivated to capture the economic incentives of proper fertilization.
PotashCorp explained why it believes fertilizer demand will increase throughout 2012.
“In North America, we anticipate improved demand through the remainder of 2012. This should be evident in the second quarter, although it may not match the level of demand experienced in the same period last year when dealers moved earlier to begin restocking for fall. We believe that dealers will attempt to finish the spring planting season with limited inventory and begin the process of restocking in the third quarter. With the prospect of an early harvest and the expectation of limited dealer inventory, we anticipate a strong second half and total 2012 demand in the range of 8.5-9.0 million tonnes,” the company announced in a statement.