- Ukraine recovery should be based on development of territorial communities, innovations, involvement of professional domestic community – results of ESUR forum 29.06.2023
- Ukraine repatriates five more seriously wounded Russian POWs 10.04.2023
- Rada intends to include history of Ukraine, foreign language in final certification for general secondary education 10.04.2023
- Rada terminates protocol on joint anti-terrorist measures in CIS territories for Ukraine 10.04.2023
- 100 Ukrainians, incl defenders of Mariupol, returned according to swap procedure – Yermak 10.04.2023
Extension of grain deal may lead to increase of fertilizer market by 15-17% – Group DF
KYIV. April 4 (Interfax-Ukraine) – Demand for mineral fertilizers after the extension of the grain deal grew by about 15-17%, and the fertilizer market is experiencing an uncharacteristic for April boom, Oleh Arestarkhov, director of corporate communications at Group DF, told Interfax-Ukraine.
“Now we are seeing a boom in the fertilizer market, uncharacteristic for April. According to preliminary estimates, demand growth is at least plus 15-17%. Farmers have regained confidence, they are investing in plant protection products and fertilizers – in those products that have a direct impact on the harvest and quickly pay off throughout the agricultural cycle,” Arestarkhov said.
He recalled that this year there was a non-standard shift in the period of peak seasonal demand – by about two months: for many reasons, farmers, especially from territories close to the front line, postponed the decision to purchase mineral fertilizers until the last moment.
“In February and March, Ostchem plants reduced prices for fertilizers due to lower gas prices. We managed to ‘warm up’ the market – in early March, demand was actively growing. A serious catalyst for this whole process was the grain deal – demand grew even more in March,” the expert said.
According to him, two weeks after the signing of the grain deal, farmers are more actively selling their goods, which were previously stored in warehouses. As a result, they receive more working capital to support the sowing campaign.
Arestarkhov clarified that this trend concerned small and medium-sized farms: many of them waited and did not sell grain until March, they stored it in warehouses, because wholesale players – international traders and holdings buying grain, set on the domestic market quite low, in their opinion, grain purchase prices.
“There was a significant pent-up demand, a long wait has become a stretched bowstring that has now shot. Someone finally waited in line at the ports or at Ukrzaliznytsia, someone – good prices for corn and wheat on the domestic market. The goods were sent, the proceeds were received and they had more working capital. Plus, government-subsidized loan programs are helping. We see a gradual recovery in lending to fertilizer deals, bill schemes are working,” the representative of Group DF described the situation.
According to him, the lack of a clear understanding of the period during which the grain deal will be valid – 60 days or 120 – motivates farmers to actively sell stocks.
He noted that the group sees the determination of farmers to carry out a successful sowing campaign “by all means,” which gives optimism to all markets related to the agricultural sector. “Therefore, Ostchem does not reduce the load on its industrial sites,” the representative of Group DF said.
In his opinion, the extension of the deal in May from 60 to 120 days will lead to a further increase in consumption in the fertilizer market.
“In a positive scenario, the (fertilizer) market may recover to pre-war levels by early 2025. The key factors determining the future of the mineral fertilizer market are the timing of the end of the war and the price of gas, the main ingredient for production of nitrogen fertilizers. Extension of the grain deal and gradual the removal of logistics restrictions will give the agricultural sector a reduction in costs and an increase in marginality. For the fertilizer market, the signals are now positive,” he concluded.