Glyphosate demand expected to double

Global demand for glyphosate may double over the next five years as farmers switch to no-till agriculture and use more inputs, says a market intelligence firm from California.

In a recent analysis of the glyphos-ate industry, Global Industry Analysts (GIA) of San Jose, California, predicts that farmers around the world will use 1.35 million tonnes of glyphosate by 2017.

That’s almost double the 740,000 tonnes of glyphosate farmers are expected to use this year, GIA said.

Use of the popular herbicide will spike in all regions of the globe, but demand will be particularly strong in Asia, the report said.

Asian demand for glyphosate is expected to rise from 226,000 tonnes this year to 460 million tonnes by 2017.

Increased adoption of no-till cropping practices will drive demand for glyphosate as more producers kill weeds with chemicals rather than tillage, the report said.

As well, continued adoption of Roundup Ready genetically modified crops and growth of the biofuel industry should increase glyphosate demand.

Assuming GIA’s estimates are correct, how will a doubling of glyp-hosate use affect future prices?

Glyphosate prices spiked in 2007, 2008 and part of 2009 when the explosion in commodity prices pulled crop input costs higher and global production of glyphosate dipped.

According to Alberta Agriculture’s statistics and data development branch, the price of Roundup Weathermax peaked at $160 per 10 litres in the summer of 2009.

The price of glyphosate crashed in the winter of 2010 and has remained low for the last two years. As of August, the herbicide cost $63 per 10 litres, based on Alberta Agriculture figures.

“We saw the lowest prices in the history of glyphosate (over the last couple of years),” said Darren Palendat, crop protection specialist with Farmers of North America, which distributes a glyphosate called ClearOut 41 Plus.

However, he said the days of rock bottom prices are likely over.

“Since January 2012 … wholesale pricing in the marketplace has moved up about 80 cents per litre for glyphosate,” Palendat said.

“And we’re getting indications from both our Chinese and North American suppliers that there will be additional price increase of 30 to 40 cents (per litre) by Christmas time.”

Palendat said prices were artificially low for the last two years for two reasons:

  • over-capacity in China, which manufactures most of the world’s generic glyphosate
  • Monsanto’s decision to compete on price against generic distributors

“Monsanto basically announced to their shareholders … that they were going to lower their cost of branded products to buy back market share,” he said. “And they were pretty effective at that…. They ran a lot of generic players out of the market by lowering their price.”

Monsanto Canada spokesperson Trish Jordan said it’s no secret that Monsanto decided two years ago to lower its prices and compete in the glyphosate market. Yet, the company didn’t set out to eliminate its competition.

“It’s not our policy to undercut. Even our lowest priced brands are sold at a slight premium over the generics,” she said.

“(But) we’re a business and we’re going to be competitive. We want to compete for that business.”

Palendat echoed conclusions from the GIA report, noting that demand from the rapidly expanding middle class in China and India for high quality food should keep commodity prices high.

Assuming grain and oilseed prices remain strong, he said the marketplace will likely pull glyphosate prices higher in 2013 and beyond.

“We see a definite continued increase. To what it (price) will increase is uncertain.”

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