Fertilizer prices to rise on global production shifts

CNS Canada — Canadian fertilizer prices are expected to increase as spring draws nearer, according to industry professionals.

“The further you buy out from spring, the prices tend to be a little bit lower. In making your commitments early, prices tend to edge up as you get closer to spring,” said Don Kitson of International Raw Materials at Fort Saskatchewan, Alta.

With fertilizer being a commodity, he said, no one really knows what the price is going to be, but they will become stronger as winter recedes. He advised farmers find a retailer they can rely on and who can tell them when it’s the right time to buy.

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Over the last year, fertilizer prices have jumped by 20 to 25 per cent, said Clare Kinlin, sales manager with MacEwen Agricentre at Maxville, Ont.

The reason for the jump is changes in exports from China, which is affecting the world supply and demand of fertilizer.

“They used to export so much nitrogen on the world market and now they are an importer of nitrogen,” Kinlin said.

Other influences on future prices he cited include the soft Canadian dollar and the consolidation within the industry, noting the latter “has reduced options where we can buy.”

Kinlin said some fertilizers, especially solids, are up by as much as $100 per tonne, while liquids have seen price increases of up to $50 per tonne.

According to Kitson, China cut its urea production to reduce the environmental impact.

“That really affected the world supply balance,” he said. “A lot of it is tied to coal and (the Chinese) trying to improve their environment.”

Kitson noted China produces enough fertilizer to cover most of its own needs and for export, while importing from other countries.

“They are a major importer of potash fertilizers, so that’s always a big interest to Canadian companies. Canada is one of the largest exports of potash in the world,” he commented.

Regional issues also affect future prices. If something happens along the U.S. Gulf Coast with fertilizers it impacts prices in Western Canada, Kitson said, but that takes some time to materialize — perhaps a month and a half.

“When you need that load of fertilizer, you need it. If you are planning to get it, you are more interested in what’s going on in the big picture,” he said.

— Glen Hallick writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow CNS at @CNSCanada on Twitter.

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Glen Hallick writes for MarketsFarm specializing in grain and commodity market reporting.

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