Predominantly negative trend in Germany’s fertilizer market in 2017/18
Mar. 19, 2020
After last year’s record grain harvest, there was a slight decline in total production during the 2017/2018 season, mainly driven by coarse grain, while record harvests were again recorded for wheat and rice. However, consumption also increased significantly, so inventory levels did not increase further, causing prices in grain markets to rise. During the current marketing year, global grain production is currently declining slightly, and consumption, especially of corn and rice, is expected to continue increasing. In total, a drop in stocks of wheat and coarse grain is expected by over 50 million tons.
On the global market, fertilizer sales again rose positively in the 2017/18 financial year. According to preliminary figures, global consumption across all three nutrients rose by 1.3% to 187.0 megatons, with a growth of 0.8% for nitrogen, 2.0% for phosphate and 1.7% for potash. In view of the effects of adverse weather conditions to key growing regions and geopolitical trade risks, moderate sales growth is expected for the current 2018/2019 marketing year.
Sales of all three main nutrients in Europe rose by around 1.1% according to preliminary figures. In 2017/2018, a total of 17.4 million tons of nutrients were sold, compared to 17.2 million tons in the previous year. There was only a slight increase in nitrogen sales at 11.6 million tons, while with phosphate, just under 4% more stocks were sold in the EU-28 at 2.76 million tons of P2O5. Potash sales, however, rose by 3% to 3.02 million tons of K2O. While stagnant or slightly declining nutrient use is still expected in Western and Central Europe, the forecast for Eastern Europe is expected to be positive.
After the difficult harvest year in 2016/2017, the 2017/2018 season was again a year of extreme weather for German farmers. A very wet autumn in 2017 had a significant regional impact on the accessibility of soil. From April, however, very warm and dry high-pressure weather was decisive in many regions. This trend, with record-breaking temperatures and very low rainfall, continued until late summer. The drought brought about noticeable growth restrictions, and water balance was negative in many regions until spring 2019, which also poses significant risks to the current growing season.
According to provisional information from the BMEL, the harvest volume for grain (excluding maize) in 2018 was 34.5 million tons, about 15% below the already weak harvest of the previous year, and north and east Germany were particularly affected with losses of up to 33%. Given the decline in harvests, including in other regions of Europe, producer prices for most cereals are noticeably higher than last year. Rapeseed, maize and potato harvests also remained significantly below the average of the past few years.
Bad weather conditions and transport difficulties caused by low levels of water combined with stricter fertilizer regulations dampened the sales of mineral fertilizers. This difficult situation is expected to continue in the current fertilizing year.
Sales of nitrogen fertilizers in 2017/2018 totaled 1.477 million tons, a decrease of 9.8%. For the first time in many years, this is visibly below the long-term average of around 1.6 million tons of N. In addition to adverse weather conditions, stricter fertilizer ordinance requirements have also contributed significantly to this.
With a market share of 36.6%, lime ammonium nitrate is traditionally the most important mineral nitrogen fertilizer in Germany, although sales fell by 5.5% overall. The volume of urea dropped to 19.4%, a decrease of almost 114,000 tons. Sales of “other nutrient fertilizers,” which include sulfur-containing fertilizers, such as ammonium sulfate nitrate, increased by around 4.6%. Their share of the total nitrogen fertilizer market was 26.3%.
Current nitrogen fertilizer sales in Germany (in thousand tons)
A significant decrease of almost 10% to 208,527 tons of P2O5 was recorded for phosphate (P) containing fertilizers. While sales of superphosphate rose by 9.7% to 22,280 tons, sales of all other P fertilizers were significantly below the previous year's figures. A decrease in sales of such fertilizers was particularly clear at 52%. NP fertilizers also made up the majority of the market, with a relative market share of 64%, while there was a 12.4% drop in sales of NPK compound fertilizers.
Potash sales was significantly negative during the reporting period at 9.9%. Total sales fell by 38,440 tons to a total of 391,640 tons of K2O, while potassium sulfate increased slightly by 3,400 tons, and there was a decline in sales of all other potash fertilizers. Nevertheless, potassium chloride retained the lion's share of potash sales at 70.4%, with the majority being accounted for by potassium chloride at 70%, and potassium sulfate recorded 6.7%.
Sales of lime fertilizers rose by 9.5%, totaling 2.93 million tons of CaO, with 79% of this being attributed to carbonated lime, which remains the most important lime fertilizer. At a 21.2% growth, sales of other types of lime, including mixed, carbo and residue limes, increased significantly.
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