Commodity prices impacting on fertiliser

7 February 2011

Increasing worldwide demand for food and energy is strengthening international fertiliser commodity prices, and New Zealand’s leading farm input co-operative is questioning how long it can hold prices.

“We source from a world market and are subject to international market forces. At the moment we are seeing demand for food increase as the world population grows and suppliers make choices about using gas for energy or to produce nitrogen,” says Ravensdown CEO Rodney Green.

“What seem like relatively subtle changes in the world environment can have a major effect. In the last year we’ve seen drought cause Russia’s coarse grain crops to fail and slightly lower crop yields in the USA.

“Then it becomes a simple supply and demand equation and when food commodity prices are strong we see upward movement in world nutrient prices.

“Our co-operative principles mean we provide our shareholder customers with products at the lowest sustainable costs and we always hold our prices as long as possible but we are starting to feel the pressure of these increases,” he says.

The urea price has increased by US$100 per tonne since 1 September 2010, DAP has almost doubled in price since November 2009 and sulphur which is commonly around US$50 is currently about US$200 a tonne. On top of this shipping prices have also increased.

“We don’t have a crystal ball but we encourage farmers to take advantage of the current pricing, weather conditions and spreading capacity to get their nutrients on now,” says Mr Green.

“Agriculture is still the backbone of New Zealand. With the poor to average start to the growing season around much of the country, and higher international food prices it makes sense for farmers to maximise their productivity and profitability. We will continue to work closely with farmers to match their fertiliser-use with desired production outputs.”

ENDS

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