Fertilizer prices suddenly collapse in late 2008

The International Center for Soil Fertility (IFDC) reports that, with the exception of potash, world fertilizer prices have dropped dramatically.

Gregory explains why fertilizer prices fell so rapidly in late 2008. "The high fertilizer prices caused 'demand destruction.' Farmers were unable or unwilling to pay two or three times the prices of early 2007." Collapse of the global credit market, a trade recession, and slowdown in world economic growth worsened the situation. Demand for fertilizers fell and stocks accumulated. Fertilizer manufacturers cut back on production.

"But potash prices have stayed high due to its shortage and difficulties in transporting Russian potash because of an enormous and expanding sinkhole near the Silvinit mines," Gregory says. "Demand for potash increased from 2006 through 2008, and potash inventories are now 37% lower than over the past 5 years."

A couple of thoughts I will be researching.

First, if lower demand has translated to lower utilization, this should show up as reduced inventories of 2008 commodity crops, like rice, soybeans, and wheat, and reduced supply of perishable fruit crops like bananas.

Second, with fertilizer prices now low, this would be a excellent time to replenish African soil fertility, currently in crisis. Especially in consideration of a possible reduction in 2009 food inventories world wide.

(recycled from nscss.org)