Fertiliser Market Update - West Midlands Group · Fertiliser Market Update ... Delays, etc...
Transcript of Fertiliser Market Update - West Midlands Group · Fertiliser Market Update ... Delays, etc...
• In the event that this presentation contains forecasts or estimates in relation to fertiliser and grain prices (or any other matter) then these forecasts are expressions of CSBP’s opinion only, and are based on assumptions that are subject to significant uncertainties and contingencies. Some (if not all) of these contingencies are outside of CSBP’s control and actual future events may vary significantly from the forecasts or estimates. To the extent that the presentation contains information from third party sources, that information has not been independently audited or verified by CSBP.
• CSBP makes no express or implied representation or warranty that any estimate or forecast will be achieved or that any statement as to future matters will prove correct.
Disclaimer
Fertiliser market forces are global and Australia is a small part
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Africa 3.0%
East Asia 40.2%
Eastern Europe and
Central Asia 3.9%
Latin America and the
Caribbean 6.1%
North America 12.7%
Oceania 1.2%
South Asia 19.8%
West Asia 3.1%
Western and Central
Europe 10.0%
Africa 8.8%
East Asia 12.2%
Eastern Europe and Central Asia
26.5%
Latin America and
the Caribbean
4.6%
North America 11.7%
Oceania 0.5%
South Asia 0.4%
West Asia 17.4%
Western and Central Europe 17.9%
Africa 5.8%
East Asia 16.0%
Eastern Europe and Central Asia
2.5%
Latin America and the
Caribbean 15.4%
North America 12.2%
Oceania 2.4%
South Asia 17.2%
West Asia 5.4%
Western and Central Europe
23.1%
Africa 3.8%
East Asia 39.3%
Eastern Europe and Central Asia
10.4%
Latin America and
the Caribbean
2.8%
North America 12.5%
Oceania 0.5%
South Asia 14.6%
West Asia 6.7%
Western and Central Europe 9.2%
Global consumption Global exports
Global imports Production
Australia is a net importer and the relatively small market position makes domestic participants price takers in a global market.
POTASH
MAP, AGNP, DAP, DAPNP, SMAP
ROCK
UREA POTASH, TSP
UAN
UREA
DAP, MAP
UREA, ROCK, SSP, MAP TSP
POTASH
SOA
Fertiliser Supply Sources to Australia
Fertiliser lead times
Usage
Pricing
Sourcing
0 30 60 90 120 150 180 210 240
DAP
UREA
MOP
UAN
SUPER Rock
DAYS
Notice to supplier Notice to Ship Owner Arrival Window at Loadport Ship Inspection and Loading
Sailing Time Bad Weather, Delays, etc Manufacture / Curing Inventory Cover
March Jan
July Feb
March Jan
Oct
July April Feb
May Feb Dec
June
June
Usage
Pricing
Sourcing
Some Perspectives
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Global Grain stocks are currently high enough to prevent a repeat of 2008’s food riots. (World Bank. Food Price Watch Aug 12)
India’s fertiliser usage for 2012/13 could possibly be down by 9 million tonnes compared to 2011/12. IFFCO reports a 50% decrease in potash sales and a 30% decrease in phosphate sales. (Reuters 03 September). {Poor Rabi monsoon, a change in domestic fertiliser subsidies and a depreciated Rupee}.
Current Indian DAP manufacture cost is USD 620 per mt CFR compared to their DAP import contract price of USD 580 per mt CFR.
Corn Stocks in USA will be low but area to be planted to corn in 2013 is likely to be same as in 2012. They can’t grow any more !
Possible impact of residual phosphate and potash levels from USA corn crop.
DAP supply/demand is currently in balance, a surplus of Urea supply seems to be building with Potash being managed.
What happens on the world stage, impacts Australia.
Fertiliser price trends
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100
200
300
400
500
600
700
Jan2010
Mar2010
May2010
Jul2010
Sep2010
Nov2010
Jan2011
Mar2011
May2011
Jul2011
Sep2011
Nov2011
Jan2012
Mar2012
May2012
Jul2012
Sep2012
Nov2012
Jan2013
US$/tonne Fertiliser price trends
Urea DAP Potash Sulphur
Commodity Trend Summary
Price
1
mth % change
12
mth
%
change
Wheat price (A$/tonne) 331 $/t ▼ (2.0%) ▲ 41.7%
Barley price (A$/tonne) 295 $/t ▼ (4.2%) ▲ 27.2%
Canola price (A$/tonne) 578 $/t ▼ (0.2%) ▲ 10.3%
Feed Barley price (A$/Tonne) 276 $/t ▼ (2.8%) ▲ 21.8%
Beef price (c/kg) 159 c/kg ▼ (7.3%) ▼ (17.4%)
Lamb price (c/kg) 303 c/kg ▲ 12.0% ▼ (43.7%)
Wool (c/kg clean) 1131 c/kg ▲ 2.9% ▼ (5.8%)
Increasing global nitrogen (N) production and consumption
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Nitrogen demand and supply balance
Source: IFA, “Global Fertilizers and Raw Materials Supply and Supply/Demand Balances 2012 – 2016”, 21-23 May 2012. Yara Fertiliser Industry Handbook February 2012
Moderate growth in nitrogen volumes
• The International Fertilizer Association (IFA) forecasts nitrogen fertiliser demand growth at 1.5% p.a to 2016.
• Higher growth rate for urea expected. Urea is the most widely used and traded nitrogen fertiliser due to its ease of transport.
Regional supply/demand imbalance
• Main urea exporters are gas rich countries/regions with small domestic markets.
• The main exception is China which produces for supply to its domestic market.
• Ammonium nitrate still widely used in Europe.
Potential surplus emerging by 2015.
• Large ammonia capacity increases expected in China, Africa and West Asia
• New urea capacity being developed in large consuming countries (China and India) however new India capacity is uncertain.
• Shale gas developments in the US may lead to significant new sources of low cost ammonia production.
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20
40
60
80
100
120
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160
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Million tonnes product
2016 2015 2014 2013 2012
2010: Global urea imports 2010: Global urea exports
United States 18%
India 16%
Brazil 7%
Mexico 5%
Bangladesh
4%
Rest of the world
50%
West Asia 34%
China 20%
Russia 13%
Egypt 9%
Ukraine 8%
Rest of the world
16%
Improving nitrogen demand is expected to absorb short-term incremental supply potentially followed by oversupply.
Fertiliser Demand Other Demand Supply
Increasing global phosphate (P) consumption and production
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Phosphoric Acid demand and supply balance
Source: IFA, “Global Fertilizers and Raw Materials Supply and Supply/Demand Balances 2012 – 2016”, 21-23 May 2012. , Deutsche Bank, “US Fertilizers: Eating Through the Cycle”, 5 March 2010
Moderate growth in phosphate volumes
• IFA forecasts phosphoric acid demand growth at 2.3% p.a. to 2016.
• DAP share of phosphate fertiliser consumption expected to increase.
MAP and DAP are actively traded.
• The US and China are the largest exporters of MAP and DAP.
• India and to a lesser extent Brazil dominate the import market.
Potential surplus emerging
• Increase in DAP supply expected to grow at a higher rate (4.3% p.a.) than demand (2.9% p.a.).
• Growing phosphoric acid capacity in China, Morocco and Brazil.
• Low cost sources typically involve relatively high sovereign risk.
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10
15
20
25
30
35
40
45
50
Million tonnes product
2014 2013 2016 2015 2011 2012
2010: Global MAP/DAP imports 2010: Global MAP/DAP exports
India 38%
Brazil 11% Argentina
4%
Pakistan 3%
Australia 3%
Rest of the world
41%
United States 29%
China 24%
Africa 19%
Russia 17%
Europe, Other
Asia, and Oceania
6%
Rest of the world
5%
Firm demand leading to balanced market conditions with a moderate surplus emerging.
Demand Supply
Global potash (K) dynamics
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Potassium demand and supply balance
Source: IFA, “Global Fertilizers and Raw Materials Supply and Supply/Demand Balances 2012 – 2016”, 21-23 May 2012. , Deutsche Bank, “US Fertilizers: Eating Through the Cycle”, 5 March 2010, Potash Corp 2011 Online Overview
Strong growth in potash volumes
• IFA forecasts potassium fertiliser demand growth at 3.7% p.a. to 2016, expected to outpace nitrogen and phosphate demand.
• This is largely attributed to the under application of potash to soil and higher crop yields increasing potassium nutrient removal.
Highly concentrated global reserves
• Potash reserves are highly concentrated globally, with a small number of large mines providing supply.
• More than 60% of global supply from Canada and the Former Soviet Union; Dead Sea-based producers represent a further 11%).
• Potash earnings tend to attract a higher multiple than those from phosphate or nitrogen due to this nutrient’s highly consolidated industry structure
Short-medium term surplus emerging
• Attributed to significant capacity additions expected from brownfield development projects, despite expected delays in this capacity coming online.
• Concentration of reserves results in greater price discipline than other nutrients.
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20
30
40
50
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m/t product
2016 2015 2014 2013 2012
2010: Global potash imports 2010: Global potash exports
United States 19%
Brazil 15%
India 14% China PR
12%
Indonesia 5%
Rest of the world
35%
Canada 36%
Russia 19%
Belarus 15%
Germany 9%
Israel 9%
Rest of the world
12%
Potassium surplus forecast over the next five years despite strong volume growth.
Other Demand Supply Fertiliser Demand
Residual Nitrogen and Phosphorus - Badgingarra
• Canola in 2011 and Wheat in 2012
• In 2011 we looked at how much of a response curve we could get to
phosphorus and nitrogen rates
• In 2012 we wanted to look at how much residual we could get from
those rates applied in 2011
• Site
o 2008 – 2010 Sub-Clover (150kg SuperPotash 3:1)
o Red sandy loam
Soil Tests
Description pH EC OC N(Nit) N(Amm) P PBI K S
0-10 Br orange sandy loam 4.8 0.10 1.1 40 4 14 31 128 5 10-20 4.5 0.05 0.4 15 2 8 17 41 3 40-50 4.2 0.02 0.2 2 1 2 42 46 6
90-100cm 5.1 0.02 0.1 1 1 1 51 59 12
Ex Ca Ex Mg Ex K Ex Na Ex Al ECEC Ex Al% Cu Zn Al
0-10 2.9 0.31 0.33 0.08 0.07 3.7 2 0.9 1.1 1.1 10-20 1.3 0.13 0.11 0.05 0.18 1.7 11 1.2 0.1 2.9 40-50 0.5 0.07 0.12 0.02 0.25 0.9 28 0.3 6.1
90-100cm 0.6 0.09 0.14 0.02 0.05 0.9 6 0.2 0.5
2012 Wheat 2011 Canola 2 Year
Trt Yield Returns Cost Profit Trt Yield Returns Cost Profit Profit
N P (t/ha) ($/ha) ($/ha) ($/ha) N P (t/ha) ($/ha) ($/ha) ($/ha) ($/ha)
0 0 3.41 - - - 0 0 2.10 - - - -
0 24 3.83 116 92 23 0 24 2.63 265 91 174 197
0 24 4.02 168 92 75 40 24 2.39 146 155 -9 66
0 24 4.00 162 92 70 60 24 2.64 270 189 81 151
80 24 4.48 294 226 68 80 24 2.64 271 219 52 120
80 0 3.76 96 134 -38 80 0 2.25 73 128 -54 -92
80 0 3.83 116 134 -19 80 8 2.30 99 158 -59 -78
80 0 3.83 116 134 -19 80 16 2.31 106 189 -83 -101
80 16 4.01 165 195 -30 40 16 2.30 99 125 -25 -55
80 24 4.41 275 226 49 80 24 2.77 336 219 117 165
Prob <0.001 Prob 0.007
Lsd 0.33 Lsd 0.319