Fertilizer: Whats on the Horizon

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Fertilizer Whats on the Horizon?

• Everett Zillinger
• Director, Government Relations
• The Fertilizer Institute
• www.tfi.org

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Major U.S. Crop Acreagemillion acres
Doane Advisory Services.
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87.5 Billion

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Fertilizer Prices at Record Levels
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U.S. Ave. Annual Natural Gas Price
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Source U.S. Department of Commerce and The
Fertilizer Institute.
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The Falling U.S.

• Dollar Sinks to Record Low
• Dollar Sinks to Record Low With Housing Data
  Pending in Washington
• BERLIN Nov. 20, 2007 (AP) The Associated Press
  

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Shipping/Distribution Costs are UP!

• RISING
• Ocean Freight Rates
• Rail Rates, especially for ammonia
• Barge Rates
• Truck Rates

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Baltic Panamax Ocean Freight Index
Index
Stronger-than-expected demand for iron ore, coal,
steel vessels tied up due to port congestion
China adopts tighter credit policy to slow
imports and economic growth
New vessel deliveries outpace growth in global
dry bulk trade
2002
2003
2004
2005
2006
2007
Beginning of Month
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2007
2011
Million tonnes N
Source International Fertilizer Industry
Association.
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MAP 0.3 Mt
DAP 4 Mt
Russia
Uzbekistan
USA
Brazil
Venezuela
Algeria
Morocco
Saudi Arabia
Bangladesh
Pakistan
China
-1.5
-0.5
0
0.5
1.0
1.5
2.0
Million tonnes P2O5
Source International Fertilizer Industry
Association.
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3.0 Mt
2.3 Mt
1.0 Mt
2.4 Mt
5 Mt MOP eq
2.4 Mt
Source International Fertilizer Industry
Association.
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Net Result

• Nutrient markets could be tight until 2009 as
  demand has expanded more rapidly than was
  expected a few years ago.
• While urea supply is projected to grow, the
  supply/demand balance will likely remain tight in
  2008, easing slightly in 2009. If planned
  capacity expansions materialize, a surplus could
  emerge in 2010.
• The DAP, MAP and TSP market will be balanced
  throughout most of the forecast period. Very few
  producers have available swing capacity for
  export.
• Potash supplies will increase in most exporting
  countries. Because of a shift towards more
  balanced fertilizer use, no significant surplus
  will develop before 2011, at the earliest.

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Other Factors

• U.S. Nat Gas Ps to Remain High
• Energy Prices to Remain High
• Shipping/Distribution Costs to Remain High
• U.S. Dollar is Not Expected to Recover Soon
• Federal Climate Change Legislation - Costs
• Direct gt manufacturers, importers and
  retailers - purchase emissions
  credits
• Indirect gt higher natural gas Ps
• Environmental Regulations

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THANK YOU!
www.tfi.org