Downstream industry to pull fertilizer up market outlook

Recently, there has been a striking surge in the prices of agricultural futures in the international market. Analysts believe that under the combined effects of bad weather and excess liquidity that are sweeping across the globe, international agricultural product prices may soar, affecting relevant upstream and downstream industries including fertilizers, and the domestic market will also have a linkage effect. .
On August 4, the wheat price on the Chicago Futures Exchange was close to $7 per bushel, and the cumulative increase was over 60%. In addition, from the middle of June till now, the price of corn futures has increased by nearly 20% over the same period, and the soybean futures price has increased by 10% since the beginning of July. Under the support of the upward movement of the prices of major agricultural products, the price of the international fertilizer market remained strong in the past two weeks, and both urea and diammonium rose slightly. According to the IFA report, due to the highly volatile food prices and fertilizer prices in the world in 2008/09, farmers have reduced or postponed input of fertilizers; as the market recovers, the world demand for fertilizers began to rebound in 2009/10, and farmers sought more stability. The market return will further increase fertilizer input in maintaining or improving soil fertility.
From the domestic market point of view, the latest statistics released by the National Bureau of Statistics show that in July, the CPI rose by 3.3%, reaching a new high during the year, and the proportion of the increase driven by the increase in agricultural products accounted for 2.3%. In the near future, ready-to-use fertilizers in the north of the country are in the fall, and during late-season rice cultivation in the south, demand for fertilizers is steadily increasing. Urea, compound fertilizer, and phosphate fertilizer prices remain within a relatively stable price range in the end market. At the same time, the price of agricultural futures in the international market has brought pressure on the domestic market. The price of domestic wheat futures contracts has risen to over RMB 2,400/ton, which is much higher than the spot price. For a period of time, the high price of agricultural products has increased the planting enthusiasm of farmers in the main wheat producing areas in the north to a certain extent. The market generally believes that the possibility of a substantial drop in prices in the afternoon is unlikely and will continue to maintain the current stable prices.
Some domestic scholars have found that the correlation between the critical value of grain and fertilizer prices and grain production found that the ratio of grain to fertilizer is between 3:1 to 3.5:1 (ratio of pure nutrient content between chemical fertilizer and grain price) is a reasonable space for increasing grain yield and yield. . Specific to grain varieties, the ratio of grain to grain in rice and wheat is 2.5:1 to 3.0:1, and the ratio of corn to grain and grain is fluctuating from 3.5:1 to 4.0:1. According to the current domestic fertilizer prices and grain prices, the ratio of fertilizer to grain is about 2:1, that is, the output of farmers is greater than the actual input of chemical fertilizers, and the income from grain production has increased substantially.
In the international market, the prices of agricultural futures have risen sharply. With the positive recovery of farmers’ incomes in the domestic market, there is reason to believe that the prices of chemical fertilizers will continue to be strong.

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