IFA Medium-Term Fertilizer Outlook 2015 2019 Olivier Rousseau IFA Secretariat Afcome 2015 Reims, France October 21 st - 23 rd 2015
Outlook for World Agriculture and Fertilizer Demand Economic and policy context Agricultural prospects Fertilizer demand forecasts (baseline scenario)
A Number of Red Lights and Green Lights Low crop prices Decreasing support to biofuels China zero-growth fertilizer consumption policy More than half of the market is now mature India s fertilizer subsidy policy Global economic growth seen rebounding Ag markets forecast to tighten Strong prospects for Sub-Saharan Africa
Economic Activity Recovers Progressively but Remains Fragile GDP Growth (%) Short term +3.5% in 2015 Progressive recovery in advanced economies +3.8% in 2016 Rebound in emerging & developing economies Source: IMF Medium term ~4% annually Activity strengthens in emerging & developing economies Slowdown in China (6-7% annually) India: +8% annually
Policy Developments Greatly Influence the Outlook Developed Countries More emphasis on nutrient use efficiency Food industry sustainability standards China Fertilizer demand growth capped to 1% in 2015-2020 Zero growth thereafter Sub-Saharan Africa More countries subsidize fertilizers Greater support to agriculture India Uncertainty re evolution of fertilizer subsidy policies Impact of neem-coated urea?
Favourable Weather in the Main Cereal and Oilseed Production Areas Crop Conditions in AMIS Countries (as of end May 2015) Source: AMIS El Niño started in April It may last until the beginning of 2016 Concerns over a possible delayed and/or below-average southwest monsoon in India
World Cereal Production Seen Dropping Modestly in 2015 2 600 2 500 2 400 World Cereal Production and Utilization (Mt) Production Utilization 2015 output close to 2014 record -26 Mt (FA0) -9 Mt (USDA) 2 300 2 200 2 100 2 000 1 900 1 800 Source: FAO Demand driven by feed and food uses Anticipated small deficit 4 Mt (FA0) 8 Mt (USDA) Large inventories and export availabilities
400 350 300 250 200 150 100 Agricultural Commodity Prices Are Low Compared to Recent History Relative Price Evolution from January 2006 to May 2015 (Jan 2006 = 100) Wheat Maize Rice Soybean Prospects for lower yields and return Commercial farmers tend to reduce fertilizer application rates P an K consumption likely more affected Impact on: o North Am and West Europe in 2014/15 o Lat Am and Oceania in 2015 50
Agricultural Markets Seen Tightening from 2016/17 Production Expected to expand from 2016/17 Higher growth rates for soybean and maize vs. wheat and rice Gains mostly through yield improvements Area expansion in Brazil, Indonesia, Russia Aggregate World Supply and Demand for Wheat + Coarse Grains (Mt) Utilization Larger feed uses in developed and emerging economies and food uses in least developed countries Industrial uses to grow at slow pace vs. previous decade (little growth in cerealbased ethanol) Source: IGC
Agricultural Markets Seen Tightening from 2016/17 Inventories High starting point in 2014/15 Inventories and stock-to-use ratios projected to contract for all commodities Largest drops anticipated for maize, soybean and cotton Stock-to-Use Ratio (%) Crop Prices International prices projected to firm over the outlook Would remain low in the next 2-3 years in view of the large availabilities Source: IGC
Demand Drops in North America, Stagnates in EECA and Rises Elsewhere Short-term Prospects for Total Fertilizer Demand between 2012/13 and 2015/16 (Mt nutrients) East Asia South Asia North America Lat. Am. & Carib. W. & C. Europe E. Eur. & C. Asia Africa West Asia Oceania Variation in 2013/14 Variation in 2014/15 Variation in 2015/16-1,5-1,0-0,5 0,0 0,5 1,0 1,5 2,0 2,5 3,0
Different Trends Between Nutrients Annual Growth (Mt nutrients) Relative Growth (2012/13 = 100) Variation in 2013/14 Variation in 2014/15 Variation in 2015/16 110 108 N P205 K20 K20 1,2 1,3 0,3 106 104 102 P205-1,3 1,0 0,5 100 98 96 N 2,3 1,4 1,2 94-2 -1 0 1 2 3 4 5 Source: IFA Agriculture
Global Fertilizer Demand Increases Steadily Since 2009/10 160 140 120 100 80 60 40 20 0 Short-term Forecast (Mt nutrients) 200 K20 P205 180 N 27,2 38,8 29,1 38,5 23,2 33,9 23,6 37,5 27,5 40,5 28,2 29,1 30,2 185 186 31,5 31,8 41,6 41,6 40,3 41,3 41,8 96,9 100,8 98,3 102,5 104,5 107,6 108,1 110,4 111,8 112,9 Change 2013/14 2014/15 2015/16 N +2.1% +1.3% +1.0% P 2 O 5-3.2% +2.5% +1.1% K 2 O +4.0% +4.2% +0.8% Total +1.2% +2.0% +1.0% Source: IFA Agriculture
India, Brazil and the Rest of the World Drive Future Growth Aggregate Fertilizer Demand (Mt nutrients) 120 115 110 105 100 95 Source: IFA Agriculture China India USA EU Brazil ROW Marginal growth in the EU and the US Demand reaches a plateau in China +1% p.a. in East Asia More than half of the world market is mature Robust rebound in India but Steady growth in Brazil Lat Am equals N. Am in 2019/20 Firm growth in the ROW Africa 4 th contributor in volume Sub-Saharan Africa (without South Africa) is the fastest growing market (>6% p.a.)
Regional Aggregate Fertilizer Demand Medium-term Outlook (Mt N) East Asia 25% South Asia 27% North America Lat. Am. & Carib. W. & C. Europe E. Eur. & C. Asia 23% Top-3 = 75% Africa 9% West Asia Oceania Av. 2012/13 to 2014/15 Variation in 2019/20 0 10 20 30 40 50 60 70 80 Source: IFA Agriculture
Global Fertilizer Demand Seen Reaching 200 Mt in 2019/20 Medium-term Forecast (Mt nutrients) 220 200 180 160 140 120 100 80 60 40 20 0 27,2 38,8 K20 P205 N 29,1 38,5 23,2 33,9 23,6 37,5 27,5 40,5 Base year 28,2 29,1 30,2 31,5 31,8 41,6 41,6 40,3 41,3 41,8 42,9 44,0 44,9 45,7 96,9 100,8 98,3 102,5 104,5 107,6 108,1 110,4 111,8 112,9 114,7 116,4 117,8 119,2 32,8 200 33,7 34,5 35,3 Average Annual Change Base Year 2019/20 N +1.3% p.a. P 2 O 5 +1.8% p.a. K 2 O +2.6% p.a. Total +1.7% p.a.
Key Take Home Messages Agricultural situation o Bumper crop in perspective for 3 rd consecutive year high inventories and low crop prices o Agricultural commodity markets are anticipated to tighten in the next five years Fertilizer demand o Demand in 2015 is impacted by low crop prices o World demand is hit by China capping domestic demand growth o Big uncertainty about prospects in India o World demand reaches 200 Mt in 2019/20
THANK YOU FOR YOUR ATTENTION orousseau@fertilizer.org www.fertilizer.org