Fertiliser prices to climb
Fertiliser prices could rise sharply in the coming year, driven up by a combination of increased global demand and depleted stocks. An analyst with specialist rural bank Rabobank, Adam Tomlinson, said prices should not reach the heights of mid-2008. But many fertiliser manufacturers and distributors had run down inventories and any sudden increase in demand could push up prices in the short term reports The ODT. Mr Tomlinson said the recovery in dairy prices could provide that impetus.
In 2009-10, fertiliser use in New Zealand fell 25% compared to the previous year due to falling dairy prices and the financial crisis. This meant manufacturers and distributors were caught with excess stock and production capacity which exceeded demand. “In response to this, manufacturers of farm inputs have wound back production and run down inventories, which could potentially have a marked impact on prices if we see a large rise in seasonal farm input demand.”
The price of some fertiliser more than doubled in 2008 on the back of soaring demand from growing economies and countries controlling exports of raw materials for their own use. The global financial crisis last year saw demand slump as fertiliser use dropped following declining product prices.
Mr Tomlinson said agricultural commodity prices looked like staying above the 10-year average, creating a risk of a spike in demand for farm inputs and a subsequent rise in price on the back of logistical constraints. Farm input costs were at a similar level to 2006-07, but Mr Tomlinson expected that to rise in the short-to-medium term as food production increased in hand with the improved global economy.
“An expectation of higher dairy prices in 2010 will push farm input demand above 2009 levels, albeit still well below the historic high levels of the mid-2000s,” he said. Farm input costs would come under pressure from higher energy and other raw material prices, and environmental management factors.
Tags: Adam Tomlinson, Fertiliser prices, Higher dairy prices 2010, Rabobank
