Strong fertiliser demand could be capped by budgetary constraints: Rabobank

PUNE: According a recent Rabobank report, a potentially strong fertiliser demand in India may be capped by government budgetary constraints. A good crop outlook and favourable agronomic conditions support fertiliser volumes ahead of the Kharif season. However, limited subsidy availability and uncertainty over 2014 Nutrient Based Subsidy (NBS) policies might cause buyers to hesitate.

Rabobank are bearish on the global fertiliser industry, according to its Q1 Fertiliser Quarterly report. In urea, a temporary imbalance between supply and demand could put further temporary upward pressure on prices. Phosphate demand in Q1 2014 is finding support from speculative buying from the US and Brazil, with prices finding additional support from elevated sulphur prices. However, at the end of this quarter, prices for both phosphates and urea could fall to levels seen before the recent price spike, as supply will exceed demand. Potash prices are likely to remain stable at current levels, with overcapacity looming over the market and supply chains already appearing full.