NZ fertiliser prices on their way up as world demand improves

Fertiliser prices are on their way up and world demand improves. Photo / Supplied

Fertiliser prices - a key input cost for farmers - are on their way up.

The international price for DAP - the product that combines ammonium and phosphate - have been bouncing off a low point as major world producers slowly respond to increased demand.

"It's been low for a while and at those low prices, manufacturers around the world - the big players - probably were not making a lot of money," a spokesman for fertiliser co-op Ravensdown said.

"So we are seeing a controlled, disciplined rise, because demand tends to go up in places like Brazil and India at this time of year," he said.

America had an unusually wet season last year, which made for poor growing conditions and lower demand.

"Now that demand has picked up a bit, the big companies are not turning supply on quite as fast - especially China - which is a big player here," the spokesman said.

"They have the discipline to not necessarily respond instantly to that rising demand, so we have seen prices bumping up," he said.

Over the month or so, DAP prices have lifted to US$350 a tonne from $300/tonne.

Ravensdown has lifted its price to around NZ$780 a tonne from around $750/tonne in August.

"It's a big jump and we will be keeping a close eye on it," he said.

This spring would be an important one for farmers, coming as it does on the back of a drought at the end of autumn, and against the background of favourable growing conditions.

Rural lending specialist Rabobank expects the drivers behind recent fertiliser price rises will weaken in coming months.

"Subsequently, we expect prices across the global fertiliser complex will return to the low price environment by the beginning of 2021," the bank said in a commentary.

Seasonal purchasing, in particular from India and Brazil, has been the driver of prices of both phosphate and nitrogen in recent months, it said.

While prices have risen, they remain low in historical terms, it said.