Glyphosate prices are on the rise because of production problems in China.
The average price of technical grade glyphosate in China fell to US$2,878 per tonne in 2016, the lowest level in three years, according to an analysis by CCM Data & Business Intelligence, a market intelligence provider for China’s agriculture, chemicals, food and life science sectors.
However, the price started to climb in August, and there is no end in sight. CCM predicts the price of technical grade glyphosate will fluctuate between $3,309 and $4,748 this year.
That would be a 15 to 65 percent increase over the average price in 2016.
Monsanto executives also talked about rising glyphosate prices in a recent conference call discussing the company’s first quarter results.
President Brett Begemann told investment analysts that the hike in China’s glyphosate prices is being reflected in the prices of generics being sold in North America.
“That’s what gave us the opportunity to make the small adjustment in our price to the positive side in the U.S.,” he said.
“And my anticipation at this point is we will continue to move in that direction.”
Monsanto’s dealer list price increases in Canada have been minimal to date, amounting to less than 12 cents per litre depending on formulation.
Greg McDonald, general manager of crop protection and seed with United Suppliers Canada, thinks the prices will continue to rise.
United Suppliers buys glyphosate direct from manufacturers and distributes it to its retail owners.
“We are noticing our cost of purchase is higher, and it’s trending higher,” he said.
It doesn’t help that the Canadian dollar has weakened against the U.S. dollar.
However, McDonald said glyphosate prices were at historically low levels, so he doesn’t think the price hike will deter growers from buying product this year because it’s still a good value.
In fact, he thinks demand will be stronger than normal because of the need to destroy unharvested crop.
His advice to growers is to secure their glyphosate needs sooner rather than later and to get the product on their farm.
“The farmers that take advantage of early purchasing and early (delivery) will be much better off than ones who are waiting in an upward market,” said McDonald.
CCM said the main reason glyphosate prices are on the rise in China is higher raw material costs, in particular glycine and paraformaldehyde, which are the two main chemicals used to make glyphosate.
Those two raw ingredients are mainly manufactured in China’s Hebei province, where pollution is rampant. The environmental protection ministry has ordered heavy polluters in the province to curtail production.
“Many producers of glycine and paraformaldehyde have reduced their operating rate, which in turn increases the prices due to lower supply and shortage,” said CCM in its analysis.
It expects the environmental crackdown to continue throughout 2017, keeping prices high for raw ingredients and glyphosate.
The other major factor is the heavy snowfall in northern China. It has forced two of the country’s top suppliers of paraformaldehyde to shut down operations completely because of logistical bottlenecks.
OPEC’s decision to limit oil production is also a contributing factor because oil is another raw material used in the production of glyphosate.