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Along with Potassium and Nitrogen, Phosphorous is one of the three key ingredients for plant
growth. Although consumption is still well below Nitrogen on a globalised and annualised
basis, growth has picked up quite considerably over the last few decades. In fact, uptake
has been so large, that phosphate consumption has exceeded or at worse matched nitrogen
consumption since the mid 1990s. Most of this growth has been driven by developments in
the emerging economies. China, for example, has seen strong consumption growth over the
past few decades, which has been driven mainly from a governmental level. The government
of China is focussed on becoming self sufficient on an agricultural commodities as well as
on a agricultural products in general. And therefore, consumption within the country
has grown to such an extent that it now accounts for approximately a third of the global total.
Two other emerging economies that have experienced strong growth over the past decade include
Brazil and India. In Brazil this has been a function of both crop choice as well as
increasing arable land. In India this has been largely a function of their generous
fertilizer subsidy scheme.
The outlook for 2013 Is mixed. On one hand we have India where there are significant
concerns and this relates to the fact that they changed their fertilizer subsidy schemes
in the phosphate industry back in 2010. They decontrolled prices and, as a consequence,
we have seen sales of phosphate based products, especially DAP, reduced quite significantly
and stocks increased.
This is not going to change until the Indian government does something about the imbalance
between the subsidies.
Bearing in mind that the short term outlook for supply is focused on capacity expansions
in the Middle East and North Africa, the situation for India becomes even more precarious. In
2013,we are expecting new capacity to come on stream in Morocco, Tunisia as well as Jordan.
Taking into account that Saudi Arabia will be looking to produce at much higher levels
than they have in the past, India could become one of the main battle grounds for tonnages
that see in 2013.
It's not all bad news though. We expect consumption growth to return to the North and South American
markets. This is going to be principally driven by the fact that we have seen strong crop
prices develop in the latter half of 2012 and farmers are being encouraged to plant
post to post.
Moving on to the Latin American markets, Brazilian consumption will increase not only from the
fertilizer market but also then from the animal feed markets. This is going to be driven both
from a domestic perspective but also from an international perspective. On the domestic
side we are going to see an continued increase in wealth and incomes, driven by the continued
industrialisation within the country. This will stimulate a higher calorific intake of
the population as they have more money to spend on higher quality food. As a consequence,
we will see demand for meat increase which will stimulate IFP demand.
On the export side we are expecting to see the Brazilian real devalue slightly against
the US dollar, which will then promote exports of meat, again which will stimulate the demand
for meat and also IFP demand.
Overall, 2013 is expected to be challenging especially for producers. However opportunities
will still arise therefore it is important that you have access to good and reliable
forecasts when making your decisions.