Fertilizer Demand Rebounding

The International Fertilizer Industry Association (IFA) released on July 2nd its Fertilizer Outlook 2010 – 2014. The report highlights that, after a gloomy year in 2009, fertilizer demand is seen rebounding in 2010 and growing in the next four years. On the fertilizer supply side, the growth of capacity is slower than anticipated last year because of numerous delays in announced projects. However, in the long-term, a potential supply surplus for nitrogen (N) and potassium (K) fertilizers can be expected due to a faster increase in capacity compared to that of demand.

After two consecutive bumper crops, it is anticipated that the 2010 world cereal output will reach a new record of 2.28 billion metric tonnes (Bt), according to FAO. With world cereal utilization seen at some 2.25 Bt, global grain stocks would remain unchanged and relatively low at the end of the 2010/11 marketing campaign. In response to relatively stable supply/demand conditions since the beginning of 2009, international cereal prices have remained fairly constant, above pre-crisis levels. A return to more stable crop prices is making it less risky for farmers to invest in fertilizers than a year ago, resulting in a more rapid recovery in phosphate (P) and potassium (K) demand than had been foreseen.

In the medium term, increasing agricultural production will be required to meet global demand for food, feed, fibre and bioenergy. Yield gains are expected to contribute to most of the output growth, as scope for expanding cultivated land in the next five years is limited and sustainable intensification of the currently cultivated land is the best option for mitigating climate change and preserving biodiversity. Meeting increasing demand for agricultural products and reducing the environmental footprint of farming will require both greater and more efficient fertilizer use.

With a return to more favorable and more stable agricultural market conditions, world fertilizer demand in 2010-11 is forecast to increase by 4.8% over 2009-10 to 170.4 million metric tonnes (Mt) nutrients. Demand for N, P and K fertilizers is seen growing by 1.9%, 4.5% and 18%, respectively. The positive agricultural market fundamentals over the medium term are expected to stimulate world fertilizer demand, which is projected to reach 188.3 Mt in 2014/15. The bulk of the increase in demand would come from Asia and, to a lesser extent, from the Americas.

Regarding fertilizer production, the conditions in the global fertilizer market stabilized in 2009, as fertilizer demand started to recover by mid-year in the main consuming countries. However, total sales and production dropped to levels unprecedented for more than a decade due to important inventory carry-overs in worldwide distribution systems. Global capacity increased in key exporting regions, but at modest rates compared with those of the previous years.

To read the full report, go to the IFA website: www.fertilizer.org.

Source: International Fertilizer Industry Association press release

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