What is in this article?:
• During the 1960s, 1970s and 1980s, world nutrient demand rose in a fairly predictable fashion. That made it relatively easy to plan new nitrogen plants, new mines and things like that.
• Such ease of planning was wiped away in 1989 with the collapse of the Soviet Union.
• Several factors should lead to increases in long-term fertilizer demand.
Big drop in supply
USDA increased the total use estimate from May by 1 percent. As a result, “there was a big drop in supply … and ending stocks are 54 percent lower than originally projected. The stocks-to-use ratio of 6.2 percent is very, very tight. … There’s been nearly a 50 percent increase in the corn price since May.”
Also, ammonium phosphate inventories reached record lows at the end of November. Potash inventories are tightening, as well, driving up prices.
“Fertilizer prices are rising, as you’d expect with rising demand. But crop prices are strong. So, we expect solid fertilizer application rates” to be used in 2011.
Looking at the U.S. crop acreage projections for 2011, USDA analysts “show strong acreage for corn and soybeans and a bit of recovery in wheat.
“As for nutrient demand levels for the U.S., after the big drop in 2008/2009, the 2009/2010 fertilizer demand was up 6 to 8 percent. We expect another 4 to 6 percent increase in nitrogen demand in 2010/2011.”
For phosphates, there was a 25 to 29 percent drop in use for 2008/2009. Vroomen and colleagues expect robust recovery in 2009/2010 and an additional 8 to 10 percent increase in U.S. demand in 2010/2011.
There was a big drop in potash use in 2008/2009 and significant recovery in 2009/2010. “We expect a 10 to 12 percent increase in 2010/2011.”
World projections released in early December show that on the nitrogen side, “we’re looking at about a 6 percent increase. With phosphate, we saw a big drop in demand but expect an 18 percent recovery worldwide. The big drop in potash demand carried over into 2009/2010 in South America – but we expect a jump of 17 percent in 2010/2011 in world potash demand.”