FARMERS are being confronted with a rising fertiliser market and the possibility of a struggle in gaining phosphorus fertiliser in time for planting this year, as tight global supplies hit home.
The price has risen in the key Gulf of Mexico origin for phosphorus fertiliser from $US280/t before Christmas to $US470/t this week.
That roughly translates into a retail rise of $A250/t for Australian consumers, from around $550/t to $800/t, taking prices back to around the same level as for the same time last year.
While farmers are upset about the rising market, concerns surrounding stock availability is a bigger issue.
A fertiliser industry source said that more than half the Australian importers have not been actively selling for four or five weeks, and the industry was starting to wonder about the flow of physical stock.
“There’s very little stock in the country, we will be relying on what is on the boats at present.”
Mitigating the pricing issue a little is the fact that many local retailers foresaw the price rise and advised their clients to place orders before Christmas, at lower levels.
VFF grains group president Russell Amery said there was significant unease within the farming community regarding the direction the phosphorus market was taking.
“There are a lot of people that are fairly disgruntled about being unable to source fertiliser for this year.
“Some are trying to place orders, but the companies are unable to guarantee supply.”
“Their concern is whether there will be sufficient supplies or enough fertiliser in the country at the right time, phosphorus is different to nitrogen in that regard in that you need it at exactly the right time, it can’t be added to the plant in-crop.”
Within the fertiliser industry, it is expected that international supplies of MAP will be extremely tight this year, which could have a flow-on effect into DAP as well.
Compounding the problem for some has been the shake-up of the rural merchandise sector, with GrainCorp, which is exiting the merchandise business, not ordering any more stock.
Several farmers in Victoria have spoken about being caught out when trying to place their normal orders with GrainCorp, meaning they now will have to source more expensive fertiliser to fill the gap.
GrainCorp corporate affairs manager David Ginns said it was possible that a small number of farmers were caught out by GrainCorp’s exit from the sector.
“We are looking to fulfil previous orders, but we are not taking any new orders and we are running down stock, so it is possible that the odd bloke has got his wires crossed and been caught short.”
“The customers that had firm orders will get their supply, but those that previously placed their orders later may have missed out, with our orders closing.”
Meanwhile, the booming sheep meat industry is having an influence on fertiliser booking trends, with those within the industry reporting the highest demand for low analysis phosphorus fertiliser, traditionally used on pastures, for some time, primarily in response to high lamb prices.
Demand from the cropping sector is unknown, while many farmers do not wish to have a large input bill, there have been many who have been running a low input program for several years, and now need to boost nutrient levels.
Mr Amery said 2009-10 was even crueller than a full-blown drought for many south-eastern Australian farmers.
While November heat and rainfall ruined yields and quality for many, the season differed from an out-and-out drought because of the reasonable late winter and early spring rains, which meant the plants produced the bulk, using up the nutrients.
“People over the past few years, with low cash flows, have probably been operating on a maintenance ration of fertiliser inputs as they looked to lower input costs, but having run down nutrient supplies and seen the plants utilising most of the fertiliser this year, they may not be able to afford to do so again this season.”
He said one flow-on benefit of the heavy summer rains was that it would cause the mineralisation of nitrogen into soils, giving farmers a free source of N.
However, the heavy summer weed burden has led to concerns of another key crop input, glyphosate.
“Glyphosate is a bit similar to phosphorus fertiliser, in that we are not sure of Australia’s stocks,” Mr Amery said.
Prices for glyphosate have also risen over the previous two months, albeit from record lows.
Mr Amery said many growers had locked in at the lower rate, but said the high usage may eat up more of the supplies than previously thought.
“A lot of growers may have got cover at the low prices, but it depends on what rainfall we receive in the next fortnight.
“If there’s more rain, then many farmers will be forced out for their third lot of summer spraying, eating into supplies they had budgeted for the planting program.”
Incitec Pivot’s managing director of fertiliser Gary Brinkworth was in America on business and was unable to comment prior to deadline.
Email a friend