Fertiliser sales pick up
Fertiliser sales have picked up since declining during the drought, with price cuts to urea, superphosphate and ammonium sulphate expected to help farmers during a tough year, says Ravensdown.
Fertiliser prices were reduced this week for superphosphate by $11 to $347 a tonne, urea $30 to $715/t and ammonium sulphate $15 to $630/t. Ravensdown's new prices follow reductions by rival fertiliser co-operative Ballance Agri-Nutrients, also this week.
The cuts were in line with lower international fertiliser commodities and reduced gas prices, with ingredient supplies expected to free up from more production at new facilities.
Ravensdown chief executive Greg Campbell said sales had come up since the drought and would be ''down slightly'' for the year ending last month, compared to last year.
He said sales were nowhere near at catastrophe level and had trended better than expected during a tough year.
Campbell said some shareholders were still feeling the pinch from the drought and had a long way to go before they could recover, but at least they could see the light at the end of the tunnel.
''It has been a particularly tough year all round with the drought. The forecast payout has given [dairy farmers] a shot in the arm and beef and wool farmers are finding it tough, so anything we can do to lower costs they will find encouraging.''
The decision by the United States to become more self-sufficient in shale gas was expected to help lower costs and two large ammonia/urea projects planned for the mid-West were expected to each produce 3500 tonnes a day.
Campbell said the discovery of huge shale gas reserves in the US had created a multibillion-dollar industry over the past decade.
This had revolutionised the US ammonia market, as the country looked to reduce its reliance on imports from traditional sources such as the Arabian Gulf. Mothballed nitrogen fertiliser plants in US plants were also being brought back to life.
He said an increase in fertiliser products would need a place to go and the rules of supply and demand could come to play. So the prospect of softer prices looked good the next two to three years.
This would depend on international demand and movements by the main players of India and China in fertiliser trading, he said.
India is removing subsidies for fertilisers except for urea and new projects might prevent China from placing tariffs that are designed to protect local farmers during their high buying season.
Ballance announced last week prices would drop on most of its fertiliser products, by $10 to $80 a tonne.
From this week its urea prices dropped $30 a tonne to $715, di-ammonium phosphate $50 to $920, potash $75 to $780, superphosphate $10 to $348, and ammonium sulphate $15 to $630.
- © Fairfax NZ News