Fertilizer Markets and Finance

On this blog I publish posts & news about what's new in the fertilizer industry and how it's markets are affected by geopolitical developments, environmental changes and monetary policies. I also focus on how farmers are affected by government decisions, and economic fundamentals of the market place. I am passionate about agriculture in Trinidad and write about problems farmers face in the agriculture industry especially in rural areas. Thanks for viewing.

Jonathan Mohan

Some of my highlighted work -
The destruction of Trinidad and Tobagos’ local banana market.

The geopolitics and economic stratagem of Uralkali’s bombshell will change the global potash oligopoly.
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Pakistan - The country’s mountain glaciers are melting and with that comes the risk of flooding and severe drought. Climate change is being taken seriously but protective measure may come to late for this region. Al Jazeera’s Imran Khan reports from Hunza Northern Pakistan.

OAO Uralkali, the world’s largest potash producer by output, will seek to maintain prices as it prepares to sign contracts with India and China and global droughts impoverish the soil, said Chief Executive Officer Vladislav Baumgertner.

“We will do our best to protect the current prices,” Baumgertner said in an interview at Bloomberg headquarters in New York yesterday. “We see a stable price environment in key markets this year.”

Dry weather in countries including the U.S., Australia and Russia this year has left soil parched, damaging crops. Potash, a form of potassium, is used by farmers to strengthen stalks and roots and help plants fight disease.

Uralkali jumped 2.9 percent to $42.18 by 1:12 p.m. in London, heading for the highest close since July 20. The shares rose 0.8 percent to 259.22 rubles in Moscow, extending its gain this year to 11 percent. The ruble-denominated Micex (INDEXCF) benchmark stock index has gained more than 9 percent in 2012.

Uralkali will probably sign a new contract with China by November and a new contract with India “immediately after that,” he said. Belarusian Potash Co., a trader part owned by Uralkali, has held the potash price for China at $470 a metric ton since the second half of 2011, and for India at $490 a ton since August 2011.

Read more at Bloomberg

Astarta Holding cut hopes for grains harvest, and lopped 20% from its hopes for sugar beet output, as the Ukrainian farming giant revealed it had fallen foul of the “negative” weather which has dented national yields.

The dairy-to-soybean processing group, which this season sowed crops on 236,000 hectares, cut by 100,000 tonnes to 600,000 tonnes its forecast for it grain and oilseed harvests.

Wheat yields, at “approximately” 4 tonnes per hectare, had fallen by nearly 11% year on year, although they remain higher than the national average, pegged by Ukraine’s farm ministry two weeks ago at 2.90 tonnes per hectare, a decline of 15.7%.

For sugar beet, Astarta, Ukraine’s top sugar producer, cut its forecast for the crop by 500,000 tonnes to 2m tonnes.

'Extremely dry and hot'

The downgrades reflected weather that was “negative” for the group’s farmers in eastern Ukraine, “as the summer months of June and July were extremely dry and hot.

"Drought in eastern and southern Ukraine affected the harvest in our fields in the Poltava and Kharkiv regions."

The comments follow a second drought-hit season for Black Sea grain production in three years, with Ukraine’s wheat harvest estimated by the country’s farm ministry at falling 27% to 16.3m tonnes.

Read more at Agrimoney

Agriculture weather in the US for today. July 25th

Cocoa speculators are bracing for what many investors fear be the worst set of processing data since the world financial crisis to see if their brighter call on the bean is justified.

Speculators have covered a mass of short positions in cocoa futures and options, turning net long last week in New York-traded contracts, to their highest level since September, regulatory data this week showed.

In London, speculators’ net short position - meaning short bets, which benefit when prices fall, exceed long holdings which profit when values rise – fell below 7,000 lots to its lowest in a year.

The moves - which have helped cocoa futures stabilise in New York and maintain a slow recovery in London from a December low, helped also by a weaker pound – have been encouraged by growing concerns for West African crops.

'Fears of fungal diseases'

"High humidity levels in key growing areas are fuelling fears of fungal diseases," Commerzbank said, noting fears that Nigerian yields could fall 30%.

Read more at Agrimoney

Pessimism among Australian growers, stoked by unsettling dryness heading into winter, has reversed, with many turned “wildly bullish” by higher grain prices, and enjoying improved rains too.

The revival in Australian grain prices - which reached Aus$291 a tonne in Sydney this week for January delivery, up more than 20% over the last month - is “offering growers an unprecedented chance to take advantage of some very healthy margins this year”, National Australia Bank said.

Prices, which on a swap basis had reached Aus$280-330 a tonne, “can have an excellent return on investment”, the bank added, noting “wildly bullish” sentiment among “farmers across the country”.

Indeed, many growers have already cashed in on the higher prices, with Rabobank noting that the rally had already “created significant interest in mid-year marketing opportunities”.

'Biggest July rain in decades'

Rabobank’s comments came as it downgraded, by 1.5m tonnes to 24.5m tonnes, its forecast for this year’s Australian wheat crop, following dry weather in many areas in, particularly, May.

Read more at Agrimoney

The floods which struck southern Russia at the weekend, killing at least 171 people, may have damaged stored as well as unharvested grains, with concerns centring on one of two giant silos at the port of Novorossiisk.

Officials and analysts were still on Monday attempting to gauge the degree of damage to standing crops in southern Russia from the floods, which followed rains on Friday night which dumped 11 inches on some areas.

One early account relayed to Agrimoney.com spoke of damage to sunflower fields, in the Krasnodar area where dryness had been a concern, although Sovecon reported market talk that “it looks like the flood hasn’t affected any significant acreage”.

"People are talking about 10,000-20,000 hectares max," including sunflowers and other crops as well as wheat, Andrey Sizov, the Moscow-based consultancy’s managing director, told Agrimoney.com

Port problems?

However, Rory Deverell at broker FCStone flagged that the flooding “may have affected already harvested winter wheat where storage terminals were flooded as well as the remaining unharvested winter crops as well as the corn and sunflower crops”.

Concerns centre in particular on Novorossiisk, the site of Russia’s biggest port for handling grain, and oil, exports, and where authorities at the local town declared a state of emergency after receiving 100mm of rainfall in two days.

Read more at Agrimoney

Ukraine’s winter-wheat crop may fall 46 percent after drought and frost ruined plants, according to the national weather center.

The crop will probably fall 8 million to 10 million metric tons, Tetiana Adamenko, head of the center’s agro-meteorology department, told reporters in Kiev today. The prior winter-wheat harvest came to 21.6 million tons, figures from the state statistics office show.

Ukraine imposed curbs on grain exports in 2010 after drought ruined its crop. Prices rose to a 23-month high in Chicago trading in August of that year, contributing to record global food costs.

Grain from the current crop was lost on 35 percent to 40 percent of planted areas according to the center’s preliminary estimate, Tetiana Adamenko, head of its agro-meteorology department, told reporters in Kiev today.

Winter barley was ruined on 60 percent to 70 percent of planted areas, Adamenko said. Winter rapeseed was lost on as much as 60 percent of sown areas.

Read more at Bloomberg

EU Parliament - Impact of greening proposals and possible alternatives. • European Parliament, Brussels, 19 March 2012

• Speaker: Stuart Agnew MEP, UKIP (Eastern Counties), Europe of Freedom and Democracy (EFD) Group

• Committee on Agriculture and Rural Development (AGRI) BRUSSELS - 6Q2 - Mon 19 March 2012 - 15:14 - 18:37 

• Item on agenda: Workshop on Environmental public goods in the new Common agricultural policy (CAP) / Impact of greening proposals and possible alternatives

• Full Agenda and Session (video): http://www.europarl.europa.eu/ep-live/en/committees/video?event=20120319-1500… Open video inline player

Carbon stored in forests and farm land will be included in the EU’s greenhouse gas reduction targets, if a draft law by the European Commission is adopted by member states and the European Parliament.

The Commission has suggested a specific legal framework for forestry and agricultural carbon, rather than incorporating them into the existing EU emissions trading system (ETS) - currently the main pillar of the bloc’s climate policy - in light of the sectors’ “specific emissions profile”.

By contrast, Australia has decided to allow abatement activities from its domestic land sector to generate Australian carbon credit units which will be allowable for compliance under its ETS.

The Australian government also will allow exchange of these credits for Kyoto emission reduction units (ERUs) which can be used in international carbon markets, including the EU ETS.

Read more at ICISHeren

Russia may not get off in 2012-13 to the flying start it managed this season in winter grain exports thanks to a hit from last month’s cold snap on crops in early-harvested areas, a leading analyst has said.

Russian winter crops overall emerged well from the freeze, which brought parts of the former Soviet Union temperatures below minus 30 degrees Celsius, data from the official Gidromet weather agency showed.

The proportion of the crop rated “weak”, seen as a proxy for those lost to winterkill, was pegged at 6-8%, below the average of 8.9%.

"There was, in general, enough snow to protect crops from the cold,"

Andrey Sizov, managing director at SovEcon, the Moscow-based consultancy, said.

Read more at Agrimoney

The jump in British farmland prices to a record high disguises the emergence of a two-tier market, as persistent drought encourages growers to prize water-retaining land which has historically traded at a discount.

Farmland values rose 11% to £6,514 last year, an increase “driven almost entirely by commercial farmers”, the Royal Institution of Chartered Surveyors said, forecasting further gains to come.

"Surveyors expect the current trend to continue - ie strength in the commercial farmland sector," Rics said.

However, the market overview hides growing concerns over water which are driving buyers to bid up heavy soils which have historically been overlooked, Andrew Pearce, head of rural agency at property consultancy Chesterton Humberts, said.

Read more at Agrimoney

The drought that began in the south end of last year caused a drop in fertilizer sales . While the domestic market was hot earlier this year in Rio Grande do Sul, the industry felt the impact caused by losses in crops. Last year, the country had record sales, with over 28 million tonnes delivered to farmers. The number means an increase of 15.5% over 2010. The consumption was also highest in the state with 3.3 million tons and 6.5% growth. According to the president of the Fertilizer Industry Union of Rio Grande do Sul (Siargs) Torvaldo Marzolla Son, the situation began to change in January, due to the drought affecting crops.

- We started the year perceived a weakness in deliveries, which was a decrease of 12.6% in January 2012 compared to January 2011. We deliver 87,100 tons in January this year compared with almost 100,000 tonnes in January 2011 - says.

The national average was 8.5% increase in sales.

- Thank God, in Brazil, there was a large growth of fertilizer, this technology. In Rio Grande do Sul, are suffering. We are praying for this to go up soon, this La Nina effect. And that is not as big a problem as we had in the past for a long time - points.

Photo: Lauro Alves

Farmers in drought-stricken areas of the country are facing crucial decisions in the next few days and weeks over what to grow this year – and their plans could mean rising food prices for hard-pressed consumers this summer.

Most of the south-east of England was officially declared to be in drought last week, and large swaths of the Midlands and south of England were confirmed as “at risk”, with hosepipe bans and other restrictions likely to be introduced soon.

Farmers in the south and Midlands are having to make tough decisions as spring approaches. Photograph: Colin Underhill/Alamy

Farmers are particularly at risk as the spring growing period approaches. Soil moisture in the key agricultural region of East Anglia has reached a record low, and many farmers have had their licences to take water from rivers and underground sources curbed. Some key crops – such as potatoes, carrots, onions and lettuce – require much more water than alternatives, and farmers must sow the seeds for many of these staples within days or weeks.

Read more at The Guardian