National Fertilizer Development Centre released fertilizer statistics for November 2009 showing healthy signs of fertilizer application growth and low prices.
However, fertilizer off-take in December is likely to remain lower on the back of seasonal fluctuation, as historically, DAP fertilizer off-take remains low in December as most of the procurement for the Rabi season finishes in November. Similarly, urea demand is likely to fall in December prior to inventory buildup for the 2010 Kharif season in January.
Aside from this seasonal movement, current forecast for low wheat production in 2010 due to less rainfall in Barani areas will hurt DAP fertilizer usage in months to come.
Urea offtake with its top dressing on cotton crop during harvesting coupled with its usage on the standing sugarcane crop, increased by 13 percent during the month, which took the 11 months sales to an all time high of 5.5 million tons. Urea prices remained almost unchanged; down 0.3 percent over last month but up 2 percent over last year.
On the other side, sales of DAP fertilizer continued to impress as the ever reducing international price helped November sales rise to a record high of 0.282 million tons. The overall 11-month figures were not disappointing either, registering a healthy growth of 114 percent. DAP prices were down by 1.5 percent in November over October - 35 percent over last year.
With peak off-take season at hand, prices have remained less erratic owing to relatively better availability of supplies in case of urea and lowered international prices in case of DAP.
However, concerns remain in case of urea where distribution issue of imported urea could cause delays in delivery to farmers. In the same manner, PKR depreciation alongside the uptick in international DAP prices could push domestic prices higher in the coming months. Before these concerns materialize, the government should work on a subsidy mechanism for DAP.