Farmers can expect more volatility in prices of nitrogen-based fertilizer in the next few years, according to the chief operating officer of Western Co-operative Fertilizers Ltd.
But Douglas Cooper said farmers looking for a decrease in phosphate prices may be disappointed.
Cooper brought his outlook for fertilizer prices to the annual meeting of Manitoba Pool Elevators, along with news of another banner year in sales and earnings for Westco, which is jointly owned by the three prairie pools and other co-operatives.
Cooper said demand for fertilizer is growing around the world as countries try to produce more grain. Companies building new fertilizer production capacity have lagged behind the demand, keeping prices high.
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China and India have been importing more than eight million tonnes of urea per year, Cooper said. But recently, China has curbed its imports because of large inventories and both countries have started producing more of the nitrogen-based fertilizer.
Cooper said urea exporters in former Soviet Union countries, the Middle East and Indonesia have scrambled to find alternative markets, but haven’t quit producing urea because they use sales to get stronger foreign currency.
World urea prices have dropped almost $100 (U.S.) per tonne in 1997.
“These lower prices are steadily working their way into the North American market,” said Cooper, adding he expects volatility for two or three years.
This fall, wholesale urea prices were around $228 per tonne, down $80 per tonne from the spring and $60 per tonne from last fall.
Ed Rempel, a farmer from Starbuck, Man., asked Cooper why Western Canadian prices aren’t fully reflecting the larger drop in world prices.
Cooper said North American prices tend to be more stable than world prices, rarely reaching the tops of price peaks or falling to the bottom of troughs.
He said spring 1998 prices for urea should be $40 per tonne lower than prices last spring.
World ammonia prices have been held high by strong demand. In North America, wholesale ammonia prices this fall were down only $30 to $40 from the spring, and only $15 lower from the previous fall.
Cooper expects phosphate price levels for 1998 to remain in a narrow range, around current levels.
After consolidation during the past several years, only a handful of companies in the United States produce phosphates. Cooper said they tend to reduce production when demand drops off, keeping prices stable.
“To me, that’s getting awful close to price fixing, isn’t it?” said Lance Vanbeselaere, who farms near Waskada, Man.
