Fertiliser prices could drop sharply due to falling oil prices and diminishing global demand. recent MPO newsletter contained an article entitled Financial Crisis Could Slash Fertiliser Prices that projected the price of DAP to fall from A$1 000 (R7 014) to 700 (R4 910).
Carl Taljaard, managing director of the company Lime & Gypsum, feels that lime and gypsum prices would not necessarily be affected by international prices as these products are mined locally. He pointed out that prices for lime and gypsum are already low at R85/t to R90/t in comparison to other fertiliser prices.
Reduced oil prices could result in lower transport costs, which could cause a small drop in the price for lime and gypsum. ideon Skhosana, vice president of marketing and sales at Foskor, predicted a drop for DAP, MAP and phosphoric acid. “We mine our own products, but prices are based on international prices,” he said. “Hence prices will drop if international prices decline.”
An anonymous source said a sustained drop in global prices should ultimately lead to a reduction in local prices, as most of South Africa’s fertilisers are imported. The weakening of the rand might, however, offset the positive impact of lower international prices. “It’s difficult to say what’s going to happen with local prices,” said Johan Vermaak, the divisional director of production and procurement at Omnia. “However ammonium, potassium and phosphate prices have remained stable over the past few months, but price benefits due to lower international prices have been lost due to the weakening rand.”
He added farmers must remember that much of the fertiliser purchased for the local summer planting season was likely committed to, prior to the onset of the decline in global prices. This could cause a significant delay in any possible decline in local prices. – Glenneis Erasmus
