Arable Farmers Shift to Dairy as Fuel and Fertiliser Costs Surge
Some arable farmers are getting out of arable and converting to dairy in the faced of soaring fuel and fertiliser prices on top of a very poor growing season.
Ravensdown chief operating officer, Mike Whitty says international policy change is already influencing global trade flows.
The introduction of European tariffs on Russian fertiliser imports has seen product redirected into major markets such as Brazil, China and India.
The impact of the European Union's carbon border adjustment mechanism has resulted in a rush on high carbon products into the region ahead of implementation on January 1.
“Urea exports from North Africa into Europe surged ahead of the levy, pushing prices up by around 15% in just a week. It’s a reminder of how quickly government policy can reshape commodity markets," Whitty says.
He says the United States is also experiencing upheaval.
"While import tariffs were lifted on most major fertiliser products in mid-November and an aid package was announced in December, the impacts are yet to be determined.”
Meanwhile, India (the world’s largest urea importer) continues to inject volatility into the global market. Since June, Indian activity has pushed international urea prices from USD $400 per tonne to USD $500 per tonne and back again.
Whitty says that with the world's biggest urea players pulling the market in different directions, short-term pricing remains highly uncertain.
“For New Zealand, global price signals are mixed. Internationally DAP values are softening, urea prices remain firm and potash is largely stable. However, the standout factor for local buyers is currency movement," he concludes.
