Inventory Pressure and Procurement Outlook: Findings of 2023 Global Major Agrochemical Market Inventory Survey

Highlights of the content

• Inventory remains relatively high in global major agrochemical market

• The overall inventory of multinational companies is relatively high

• Smaller and medium-sized markets are mostly replenishing inventories in 2023, mainly in formulations

• The inventory of retailer and farmer is relatively manageable

• Procurement will develop gradually in the first quarter of 2024

Soaring or falling prices of bulk agri-inputs in the short term is not conducive to ensuring the stability of agricultural production. "Inventory" is undoubtedly one of the key factors affecting the market trend price fluctuations this year, and the speed of inventory reduction will also affect the market trend in the rest of this year and next year. 

So AgroPages launched a "inventory survey", investigating the global major agrochemical markets’ inventory status in 2023, with the purpose of make a clearer situation judgment in the critical period of recent months, through the inventory levels, stocked products, procurement plans and supply shortages in the major agrochemical markets. 

The samples are distributed in different countries from Europe, North America, Latin America, Asia to Africa, covering upstream and downstream enterprises such as manufacturers, trading companies, wholesalers, distributors, retailers and large growers. The product categories cover herbicides, fungicides, Insecticides, fertilizers and other types. 

Moving forward to interpret the key inventory survey findings and connect the points behind the data. For example, higher inventory levels directly pressing on trading companies and wholesalers reflect market dynamics. Such contextual analysis intends to reveal the cause-effect relations and empower agribusinesses to navigate effectively, especially trading companies and manufacturers of overstocked herbicides facing current acute pressures. By logically considering through survey quantification, this report aims for readers to obtain an understanding of the global agrochemical market for critical decision-making.

Briefing of survey results

The comparation of inventory rate in different regions

The data shows that Latin America and Asia (excluding China & India) facing greater inventory pressure with higher average inventory rates of 40-50% , while Southeast Asia, India, and Africa are around 30-40% on average currently. US and European respondents reported lower average inventory rates under 30%.

Overstocked status

The survey responses indicate the most overstocked agrochemical categories presently are herbicides and insecticides. Looking at the specific products, Glyphosate, Azoxystrobin and Abamectin have the highest number of mentions for being in excess.

Inventory rates of different industry players

Comparing the average inventory rate of different samples’ positions in the agrochemical industry, the Trading companies carry the highest at 47%, then Manufacturers and Wholesalers both at 38%. Trading companies and Wholesalers play a vital role linking upstream production to downstream markets; Keeping inventory levels in moderation to support sales but not tie up too much working capital is an ongoing balancing act for Trading companies and Wholesalers in agricultural inputs. However, there is also large gap between the maximum and minimum inventory level among companies in the same segments.

Overview of Regional Procurement Plans

The survey highlights that most companies in Latin America, Southeast Asia and India plan purchases on an as-needed basis for advance replenishing to meet in-season demand rather than pre-stocking excess volumes this year. There might be some procurement concentrated in Q1 2024, especially from February to March. 

The status of shortage products

The status of shortage products reveals meaningful insights. Half of respondent companies reported no obvious shortages. However, those facing tight supplies are mainly distributors (27%) and trading companies (24%) - even taking higher proportion than their overall sample share (distributors-23%, trading companies-19%).

Many reporting shortages take in relatively small/secondary markets like Africa, Pakistan, Sri Lanka, Bolivia, Trinidad and Tobago - These group of companies haven’t purchase enough in past two years due to high prices, thus replenishment is needed in 2023. Major market players have fewer shortage situation, shortages are mostly for small scale products. For instance, cartap was mentioned by some Indian samples , while something like tebuthiuron was mentioned by Brazilian firms. 

Interestingly, some distributors in relatively small/secondary markets have expressed a shortage of glyphosate, and they are mainly purchasing formulation. However, the traditional major market for glyphosate is well supplied

Highlights of Regional Inventory Findings

European companies face more challenges

European companies face more difficulties in terms of government regulation and seeking substitutes. Although the average inventory level is relatively lower at about 20-30%, some distributors face serious high inventory pressure. The higher stock is mainly on fungicides, which companies plan to destock around Q1 2024. Due to governmental bans on many chemicals, some companies also urgently look for alternative options and increase biocontrol measures.  

Indian companies expect gradual improvement in procurement March of next year

Indian companies expect agriculture market gradually recover in Q1 of next year, with a gradual improvement in procurement during February and March. However, the overall inventory level stands 20% higher than historical level, concentrated on products like Azoxystrobin. The supply of certain key products like Hexaconazole also faces tightness risks.

Asia companies proactively stock up

Asia companies (Except China and India), especially trading companies and distributors, proactively stock up key products, with inventory level varying from 20% to 60%. The major excessive products are Imidacloprid, Abamectin and Glyphosate. Shortage risks loom for insecticides like Chlorantraniliprole. But this year may only be a stage of replenishment, the concentrated procurement will not be set in rest of this year. 

Latin America higher inventory on fungicides & herbicides

Latin America companies have an average inventory level 10-20% higher than historical safety level. Trading companies and distributors face even more inventory pressure. The major products with higher inventory are fungicides Azoxystrobin, Insecticides Abamectin and herbicide Glyphosate. Shortage risks also rise for popular herbicides Paraquat and Glufosinate ammonium in the region.

Summary and Outlook of the Market

In summary, the overall inventory level is high this year; The stocked products are mainly herbicides, insecticides and fungicides. This year may only be a stage of replenishment, concentrated procurement is not expected for the rest of 2023.

In comparison, companies in Asia and Latin America are more optimistic with relatively proactive procurement plans, expecting gradual improvement from February to March 2024. Those in North America and Europe are recovering slower due to inflation. 

Entering 2024, the agricultural market is expected to restore gradually, driving agrochemical procurement recover to help reduce inventories. This suggests potential geographic, supply chain, or temporal mismatches between inventory buildups and agricultural demand. 

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