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Phosphate Prices Steady As Producers Plan For Growth

Phosphate Price Steady as Producers Plan for Growth

General oversupply kept phosphate prices level at the end of January , Rabobank analysts said in a recent report .

Analysts at the Dutch bank believe that the lull in global trading activity that enveloped the fertilizer complex through the fourth quarter of 2012 has continued into the the first quarter of 2013 and will likely not abate before the summer.

Reduced end-user demand and inventory destocking have primarily driven this trend; these factors are the result of seasonal slowness caused by Northern Hemisphere crops being months away from requiring fertilizer and Southern Hemisphere crops already being underway.

Prices of diammonium phosphate (DAP) leveled off in January, bound between US$475 and $485 per ton fob Tampa range. DAP fertilizer prices have fallen continuously since the same period last year, losing about 5.5 percent in total.

Current demand is being driven by South American markets, with US DAP prices at $480 per ton fob and Tunisian DAP and monoammonium phosphate at about $470 per ton fob, according to the farming data source DTN Fertilizer.

Analysts at Australian bank Macquarie share Rabobank's lack of optimism regarding a 2013 phosphate price revival, and have suggested that something must change if prices are to rise.

"Entering 2013, the bearishness continues with the market now fully believing that the global supply/demand balance will have to tighten in order to reinflate prices," AgriMoney reported Macquarie as stating.

Food prices steady, but rising

Near record-high food prices in 2012 brought significant phosphate applications as farmers hoped to cash in on high crop prices. While certain agricultural zones, particularly South America, reaped strong crop numbers, others, such as the United States, experienced heat and drought, which reduced yields and forced many farmers to "plough down" crops, leaving high levels of phosphate in the soil.

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