Compound fertilizers remain aloof; what is slowing down the kickoff of the spring market?

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The Spring Festival is approaching gradually, and the festive atmosphere is growing stronger. However, the compound fertilizer market continues to maintain its “aloof” nature amid slight fluctuations in raw material prices; prices remain firmly at high levels, with little chance of any significant adjustment in the short term. In the downstream market, although caution persists over time, acceptance of the product has increased; there are occasional moves in some areas, but overall the situation remains stagnant. It is expected that the market will start later this spring compared to previous years, and due to various factors such as environmental concerns, supply and demand, policies, and grain prices, there are still many uncertainties in the market. The reasons for this are, on one hand, that the high prices of fertilizers are supported by factors such as raw materials and supply-demand dynamics; on the other hand, low prices of agricultural products create an irreconcilable contradiction between farmers’ inputs and outputs. North China: Passive acceptance, sporadic orders. The spring fertilizer market accounts for a small proportion of the total fertilizer usage in North China throughout the year. In particular, with the implementation of simultaneous seeding and fertilizing as well as slow- and controlled-release fertilizers, only some farmers still practice topdressing. Among them, the competition between high-nitrogen compound fertilizers and urea as topdressings has always been a “common occurrence”. Sun Fuwei, general manager of Xiangchenggu Xingnong Agricultural Supplies Distribution Center in Qiu County, Hebei Province, said that currently, against the backdrop of stricter environmental production regulations and persistently high raw material prices, fertilizer market prices have been rising steadily. At present, despite fluctuations in price, urea has still seen a price increase of 400 yuan per ton compared to earlier periods. Its price remains at a high level of 1,900–1,950 yuan per ton. Meanwhile, the overall price of compound fertilizers has also risen by 250–300 yuan per ton. Specifically, the price of high-nitrogen compound fertilizer with a composition of 30-0-5 ranges from 1,800 to 1,950 yuan per ton, while the price of ternary compound fertilizers containing sulfur is around 2,450 yuan per ton. He said, “Fertilizer application in spring mainly involves urea and compound fertilizers. Although compound fertilizers have gained prominence in the past couple of years and taken over some of the urea market share, there is not much profit to be made in either the compound fertilizer or urea market this year.” On average, the price of each bag of fertilizer has increased by about 10 yuan this year, and farmers are not very receptive to this increase. However, due to actual demand in the market, their current attitude is one of wait-and-see; they are expected to take action only when the time for using fertilizer arrives. However, as high prices have persisted throughout the winter, the level of acceptance has gradually shifted from outright rejection to passive acceptance. It is estimated that there will be some demand for fertilizer before the Spring Festival, mainly as farmers return after earning money and purchase some fertilizer. Use it temporarily until a better solution is found. ”Northeast: Slow progress; no supplies available at the local level. The Northeast is a key area in the market for fertilizers used in spring plowing, but due to its unique climate conditions, this market only starts to develop gradually in April and May. The Northeast market is currently quiet, but some large distributors as well as those enterprises tasked with national grain storage are also paying attention to the trends in the compound fertilizer market. Xie Yuanjuan, manager of the wholesale department at Qiniu Agricultural Inputs Chain Co., Ltd. in Qiqihar City, Heilongjiang Province, said: “Under the pressure of strict environmental regulations, many fertilizer manufacturers have reduced production or even stopped operating.” This year, fertilizer prices in the Northeast market have generally increased by 200 yuan per ton compared to last year. Currently, the price of urea in the Northeast market is 2,200 yuan per ton, while that of 64% diammonium phosphate is 3,100 yuan per ton. At such high prices, despite existing demand in the market, distributors still cannot make a profit, and farmers also find it difficult to accept these prices. It is estimated that the market will start later this year compared to previous years, and distributors will also take action a bit later; at present, retail dealers have almost no products in stock. The large-scale distributors responsible for distribution and storage are under significant pressure at this time in order to support spring plowing, and their stock levels have also decreased. It is understood that there are not many low-priced supply options in the Northeast market at present, and the future trend of the market is closely related to subsequent **policies and raw material prices. The start of the spring market in the northeast will have to wait until March or April. ”Southwest: Declining reserves and a slowing pace. In the Southwest, ** and relevant policies are driving an acceleration in land transfer and adjustments to the cropping structure in the region. Currently, local distributors are also adjusting their product portfolio and inventory levels in line with changes in the crops grown. Li Zhiyong, general manager of Guizhou Province Zhijin County Agricultural Production Materials Co., Ltd., said, “This year, our fertilizer reserves have been significantly reduced compared to previous years.” It has been reduced from 8,000 tons in previous years to 5,000 tons. In terms of pricing, due to the relatively high prices this year, downstream distributors are making purchases as needed rather than stockpiling fertilizers. This has resulted in a significant buildup of inventory pressure in the distribution sector, thereby increasing the risks associated with market operations. Although there was a certain increase in the seasonal inventory this year, which had some impact in supporting the market, its effect was limited. The main reason is the excessively high price of urea this year; with urea costing 2,000 yuan per ton, subsidies in the range of a few dozen yuan are rather insufficient, and the risks remain high, rendering such subsidies ineffective. ”