Chinese fertiliser factories 'focusing on local market' as international prices skyrocket - ABC News

International fertiliser prices are at record highs this year, with farmers now nervously watching manufacturers in China.

Key points:

• As global fertiliser prices reach record heights, Rabobank says DAP prices have risen up to 75 per cent
• Chinese fertiliser factories, that produce the bulk of supplies, are told to 'focus' on domestic market
• Winter Olympics in Beijing next year could see extra restrictions on Chinese fertiliser plants

According to Reuters, some of China’s major fertiliser companies have said they will "temporarily suspend exports" to assure supplies into the domestic market.

Rabobank senior agricultural analyst Wes Lefroy said advice from colleagues in China was there had not been any formal ban on fertiliser exports.

"Our latest feedback is that there has been some guidance given by the government for local [fertiliser] companies to focus on the local market and [to] make sure the local market in China is supplied," he said.

"So there is some concern about the availability of exports going forward."

Mr Lefroy said Australia relied heavily on imported fertiliser, especially monoammonium phosphate (MAP) from China. 

"Australia has increased its imports [from China] over the last five years … around 50 to 65 per cent of our MAP now comes from China, so we're pretty heavily exposed looking towards the next season."

A graph showing amounts of monoammonium phosphate (MAP) fertiliser imported from China since September 2016.(

Supplied: Thomas Elder Markets

)

Price hikes

According to Rabobank, global urea prices have increased between 60 to 70 per cent this year and di-ammonium phosphate (DAP) has increased by up to 75 per cent.

Mr Lefroy said the price had "rocketed" for a number of reasons, including tight supply, heavy demand from farmers and "ongoing shipping disruption", with ocean freight adding as much as 10 per cent to farmers' costs.

Rabobank is forecasting fertiliser prices to remain at elevated levels for at least the rest of the year.

Business analyst David Hanlon said farmers who held off buying product were now hurting.

"Big rural clients who locked-in winter fertiliser early in January, or earlier, are doing a lot better than those who are scrambling now to pick some up, because there's just not the product in the pipeline," Mr Hanlon told ABC Rural.

He said that many agencies were now revising their forecasts for fertiliser prices, with many expecting prices to remain high in 2022. 

Global fertiliser prices have rocketed this year and supply is tightening.(

ABC Rural: Bridget Herrmann

)

Analysts watching winter Olympics?

Mr Lefroy said China's history of pollution targets was also a potential risk to fertiliser availability.

"Typically, there is more pollution in winter, when the local population keeps themselves warm … and we've seen, in the past, some restrictions around industrial production in order to curb pollution, which can impact fertiliser production," Mr Lefroy said.

"The other factor we are watching is the Winter Olympics coming up in February 2022, where the government might make some sort of effort to reduce smog in the region, which may also impact industrial production.

"So, we are watching both these factors closely in terms of how they impact the availability of fertiliser exports out of China."

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Chinese fertiliser factories 'focusing on local market' as international prices skyrocket - ABC News
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