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Supply is limited due to production constraints; will the market improve after the Mid-Autumn Festival? ! Author/Source: Agri-Market Report Date: 2019-09-10 Clicks: 22 He Guohua, Jiangsu Changshu Agricultural Production Materials Co., Ltd. Market Analysis: The main crops grown locally are corn and wheat. It is currently the period for applying fertilizers in autumn. He Guohua told reporters that since September arrived, sales in the fertilizer market have not been satisfactory, with sales of compound fertilizers in some areas declining compared to previous years. Affected by environmental protection measures aimed at restricting production, urea manufacturers in Jiangsu province essentially ceased operations in the middle and late August. For example, factories such as Shuangduo Chemical and Linggu Chemical in Funing, Jiangsu, started shutting down for maintenance in mid-August. For this reason, local urea prices are showing a slight upward trend. Currently, the ex-factory price of urea in Jiangsu is 1,860 yuan per ton, while that of 45% chlorine-based compound fertilizers is 1,900–2,050 yuan per ton. The ex-factory price of 45% sulfur-based compound fertilizers is 2,300–2,400 yuan per ton. Future market forecast: He Guohua said that there are significant price differences among various local brands of fertilizers; among the products sold by distributors, the price difference for sulfur-based compound fertilizers can reach 400 yuan per ton. With the peak in fertilizer distribution and production restrictions coming at the same time, there is general consensus in the market regarding rising fertilizer prices. Local dealers are not very enthusiastic about purchasing fertilizers and tend to wait and see; it is expected that market conditions will improve after the Mid-Autumn Festival. Zhejiang Hangzhou Agricultural Means of Production Co., Ltd., Shu Haimin Market Analysis: Not long ago, it was the peak period for the use of fertilizers for rice cultivation in this area, and sales of urea and 45% chlorinated compound fertilizers increased compared to August. Shu Haimin told reporters that some local manufacturers intend to raise prices. Affected by the low prices of agricultural products in recent years, economic crops have suffered significant losses. Coupled with the pressure of a saturated market, farmers are cautious when using fertilizers on fruits and vegetables, and are reluctant to invest too much time, resources, and effort in them. Market saturation, rising prices from manufacturers, and a lack of investment on the part of farmers have led to stable prices for diammonium phosphate, urea, and potassium fertilizers; these factors have pushed the market into a bottleneck phase. Future market forecast: Currently, the price of urea upon arrival in Zhejiang is 1,900 yuan per ton. Shu Haimin told reporters that the market outlook is not favorable; as manufacturers have recently indicated that the purchase price for distributors could increase by 30–50 yuan per ton. As a result, distributors’ profits are greatly reduced. As the autumn fertilizer market gradually comes online, Shu Haimin said that sales of fertilizers in Zhejiang have increased at this stage, but the supply has not increased and prices remain stable. Furthermore, there are still many low-quality fertilizers with low nutrient content available on the market. Farmers purchase these inexpensive fertilizers in order to save costs, which has a significant impact on the market; as a result, some high-nutrient fertilizers are in short supply despite having a price. Urea prices are expected to rise by 50–100 yuan per ton in October. Journalist’s Notes This week, the journalist conducted investigations and interviews into the urea and compound fertilizer markets in the East China region. Recent frequent typhoons have caused severe flooding in parts of Zhejiang and Fujian, with some areas even experiencing complete crop failures, which has significantly affected local fertilizer sales. According to the interviews, there is still a significant surplus of supply over demand in the market at present, and manufacturers are eager to see price increases announced. As a result, the fertilizer market in East China is facing poor sales conditions, with distributors having increasing difficulty in selling their products. Market saturation, rising prices by manufacturers, and a lack of investment on the part of farmers – these factors have led to a bottleneck in the market. During the interview, a agricultural supplies distributor in Zhejiang told reporters that high-concentration fertilizers have been widely used in that region over the past two years. Although they can help reduce fertilizer use while increasing yields, their quality varies greatly, leading to greater chaos in the market. The reason why such high-concentration compound fertilizers dominate the market is, first, that farmers blindly pursue high yields; the greater their desire for high yields, the more fertilizer they use. By investing excessively in this way, farmers fail to achieve the desired harvests, resulting in an imbalance between input and output and creating a vicious cycle. Second, some manufacturers and distributors engage in conceptual hype to deliberately mislead farmers, without considering their capacity to bear such costs. (Lian Chen)