Source: The Brock Report

Fertilizer prices continue to drop as demand has dried up with buyers anticipating lower prices in the wake of the severe downturn in grain prices and the turmoil in world financial markets.

So far, it is mostly the phosphate and urea markets that have been hit. As phosphate and urea-based fertilizer prices have tumbled, demand has “dried up,” said Joost Hazelhoof, fertilizer analyst at Rabobank.

“A lot of big buyers have sufficient inventory for their needs and are stepping back from the market,” he told Dow Jones Newswires. In the difficult credit environment buyers will want to minimize stocks to reduce their credit needs and source fertilizer much closer to when it’s needed, said Hazelhoof.

Last week, spot market prices for Black Sea urea fell to around $580 per metric ton from $625 a week earlier and more than $800/ton in early August. Phosphate (DAP) fob New Orleans dropped to about $896 per short ton from $910 a week earlier and $1,074 in early August. Ammonia prices rose further during August and September, but buyers are now reported withdrawing from the ammonia market as well and price weakness is starting to show up.

Most farmers won’t see fertilizer price decreases passed on to them this fall, but as we said in last week’s lead story, this is not a time to be locking in prices on inputs needed for next spring.

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