GLOBAL fertiliser demand is now running hotter than it was in 2007-08 when rampant bidding sent prices sky-rocketing above $1600 a tonne, but economic turmoil in the northern hemisphere has actually cut overseas prices in recent months.
Consumption of the main nutrient products nitrogen, phosphorus and potassium is still tipped to rise about three per cent this year, but sliding grain prices, European sovereign debt worries and civil unrest in the Middle East have combined to dampen worldwide trading activity.
For farmers heading into the new cropping season in Australia the trend makes promising news as local prices reflect at least some of the softer international trends.
In the past six weeks prices for di-ammonium and mono-ammonium phosphate products (DAP and MAP) delivered to Australian ports have slipped about $35/t to range from $725 to $750/t (at port).
Urea prices are typically back about $40 to fluctuate around the $500/t mark.
International fertiliser analysts tip global prices for many product lines will be subdued at least until March, although the industry is renown for its price volatility.
Impact Fertilisers chief executive officer, Nick Sheldrick, said while good seasonal conditions and current local demand trends suggested a strong fertiliser sales year ahead, he expected prices to be generally relative to overseas movements.
"But we can't make price predictions. Since 2008 the whole market has been too volatile to forecast what prices will do," said Mr Sheldrick, whose Tasmanian-based company last year acquired the Hi-Fert network in South Australia, Victoria Queensland and NSW.
The exchange rate and a likely buying spree by India could significantly influence local prices far more than current northern hemisphere factors according to Direct Farm Inputs managing director Leighton Huxtable.
"Currency analysts keep saying the Australian dollar is too high and might be back to US95 cents by mid year - that will add at least $50 a tonne to imported product prices.
"A lot also depends on India and Pakistan. They've been out of the market lately, but when India starts buying they buy millions of tonnes and that puts a lot of new pressure on the trade."
Mr Huxtable, whose farmer-owned company sells from ports in SA, Victoria and NSW, said current prices were well down on mid-2011 peaks of $790/t for phosphate lines and $650/t for urea, but fairly similar to 12 months ago.
However Australian farmers had escaped the full impact of high global urea prices in the second half of last year due to competitive local markets, according to Incitec Pivot's chief operating officer, Gary Brinkworth.
He said local prices had since softened further as suppliers secured their new season stocks at lower overseas rates.
Rabobank tracked global price falls of more than 20 per cent for nitrogen and phosphate products in the final quarter of 2011 as farm commodity prices eased and the European debt crisis eroded market confidence across the board.
Although still strong, world demand is only climbing at about half the rate it was a year ago according to the Paris-based International Fertiliser Industry Association (IFA).
While Asian markets remain relatively bullish, latest buying trends have seen cautious farmers, particularly in Europe and North America, cut their fertiliser orders.
Rabobank analysts said more overseas price slides were likely before March as the uncertain sentiment continued.
However Rabo tipped a market rise before winter as crop plantings begin and because overall fertiliser usage trends remained strong to meet food demands.
"Tight inventory levels also still persist in some supply chains, meaning markets will be susceptible to sudden price swings," said senior Rabobank research analyst, Michael Harvey.
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