March 9, 2012
Europe''s cold snap hinders fertiliser recovery
The freeze in Europe and the former Soviet Union has washed away recovery hopes in nitrogen fertiliser demand by ruining ideas of an early start to spring cultivations, which would force farm purchases.
Yara International, the world''s biggest nitrogen group, which a month ago noted that "activity levels have increased in global nitrogen markets", struck a less upbeat note, saying it was "cautious" over demand in the first three months of 2012.
The mood reflected "further weather-related demand delays", Thor Giaver, Yara''s head of investor relations, told a conference in London.
Before last month''s cold snap, what had been a mild European winter had looked set to prompt early applications by many growers, such as those attempting to encourage grass growth for hay and silage.
The delay meant that the Norwegian-based group was being "less aggressive" in pricing, in an effort to preserve market share in a competitive market.
Indeed, Yara last week cut nitrate prices in France.
"Suppliers hope warmer weather conditions this week could trigger some interest," said Calum Findlay, UK fertiliser trader at UK merchant Gleadell.
Yara''s comments, to an investor conference organised by Credit Suisse, follow a downgrade by Mosaic to its estimate for 2012 world potash demand, saying it expected a "pause in potash shipment growth" this year.
Demand for fertilisers has also been sapped by global economic uncertainty and crop prices which, while elevated by historic levels, remain below last year''s highs.
However, longer-term, Giaver said he expected nitrogen markets to remain in "good balance", an assessment backed by Mike Wilson, the chief executive of Canada-based Agrium, who forecast extra supply over the "next few years" being absorbed by demand growth.
Credit Suisse restated Israeli potash group ICL as its top pick for share investors in the European, Middle East and Africa fertiliser sector, thanks to a discount to peers prompted by, now resolved, concerns of large payments for environmental work.