By TIM ALEXANDER
Illinois Correspondent

PARIS, France — A newly-released report from the International Fertilizer Industry Assoc. (IFA) shows that demand rebounded strongly in 2010 and will grow in sustained rates for the next four years.

A potential supply surplus for nitrogen (N) and potassium (K) fertilizers can be expected because of a faster increase in capacity compared to that of demand, according to the IFA’s study, titled Fertilizer Outlook 2010-2014.

After down year in 2009, a return to more stable crop prices is making it more attractive for farmers to invest in fertilizers, resulting in a more rapid recovery in phosphate (P) and potassium demand than had been foreseen, according to a summary of the report issued by the IFA in July.

Anticipating yield gains and an expansion of cultivated lands worldwide, the IFA concluded world fertilizer demand will increase dramatically by the end of 2011.

“Meeting increasing demand for agricultural products and reducing the environmental footprint of farming will require both greater and more efficient fertilizer use,” reads a portion of the summary. “With the progressive economic recovery and a return to more (favorable) and more stable agricultural market conditions, world fertilizer demand in 2010-11 is forecast to increase by 4.8 percent over 2009-10 to 170.4 million metric tons (Mt) nutrients.”

World fertilizer demand will rise to 188.3 Mt by 2014-15, the study forecasts, with the bulk of the increase in demand coming from Asia and, to a lesser extent, the Americas. Production-wise, demand recovered in mid-2009 in the main consuming countries, though total sales and production dropped dramatically.
Capacity growth in the short- to medium-term will expand at a slower pace than projected in 2009, according to the IFA report. A wave of mergers and acquisitions, however, has set the stage for a restructuring of the sector in the past year.

Energy prices, government policies and environmental regulations can all influence future global fertilizer supply, the IFA stated.

Washington, D.C.-based The Fertilizer Institute’s (TFI) Vice President of Economic Services Harry Vroomen told Farm World his organization provided data to the IFA for its report, along with comments on demand predictions in other countries and regions.

“TFI supports the predictions of this report,” he said.
During last week’s Illinois Farm Bureau (IFB) Commodities Conference in Normal, GROWMARK Area Sales Manager Joe Kilgus offered his own comments regarding the fertilizer market outlook.

“The U.S. has become a small player (in the fertilizer market),” Kilgus was quoted as saying by the IFB News Service. To acquire or keep fertilizer “the U.S. has got to outbid the competition.”

Kilgus pointed out China and India consume 44 percent of all nitrogen fertilizer used around the globe compared to the United States’ 11 percent.

The fact that the U.S. produces only 9 percent of the world’s nitrogen fertilizer makes our country a net importer of N fertilizer.

Because an expanding world market and changes in production costs have added volatility to the market, Kilgus told attendees they would be wise to use risk management strategies akin to selling grain and livestock. Locking in a portion of their input prices when they are at manageable levels is a must, Kilgus recommended.

Kilgus also warned farmers if growers across the state are able to apply anhydrous ammonia in regular fashion this fall – and not have to wait until the spring – and/or decide to plant more corn acres in 2011, as many are predicting, some areas could suffer from spot shortages of fertilizers next year.