News report says global fertiliser prices could rise in 2010

A limited supply of fertilisers for farmers could see a spike in agrochemical and fertiliser prices in the short term as demand improves in 2010, a new report says.

The report, from the Dutch-based Rabobank, warns that a "logistical bottleneck" could occur for farmers if higher short-term prices occur due to pressure on fertiliser stocks.

However Rabobank says prices wont reach anywhere near the highs of mid-2008.

"Along with a fall in agricultural commodity prices since mid-2008, annual fertiliser application by tonnage dropped by 6.7 per cent to mid-2009 and annual global agrochemical sales fell by 6.4 per cent (in nominal US dollar terms) in 2009 compared to 2008," Rabobank analyst Adam Tomlinson said in a statement.

Farm inputs and prices remained subdued in 2009 due to lower demand levels and a surplus stock of high-priced inventories left over from 2008, when international farm input prices collapsed.

As a result, manufacturers wound back production and supplies have been running low, Mr Tomlinson said.

Prices slumped from their highs in mid-2008 due to the impacts of the global financial crisis, which in turn affected returns from farm products and meant farmers were holding off buying input products like fertiliser.

A combination of these issues led to a decline in production from farm input manufacturers and distributors, the report says.

Rabobank expects farm input prices will remain above pre-2006 average levels in the short to medium term.

In the long-term, farmers will be able to adopt new biotechnology practices to reduce their reliance on products such as fertilisers, Mr Tomlinson said.