According to the Group DF estimates, the demand for mineral fertilizers increased by approximately 15-17% after the extension of the grain agreement.
This was announced by Group DF corporate communications director Oleh Arestarkhov.
According to him, the extension of the grain agreement, which allows Ukrainian farmers to continue supplying grain to world markets, has become a positive signal for farmers and a significant additional impetus for the development of markets adjacent to the agricultural sector.
"This year, we see a non-standard shift in the period of peak seasonal demand - by about 2 months. For many reasons, farmers, especially from the frontline areas, postponed the decision to purchase mineral fertilizers until the last moment. In February and March, OSTCHEM plants reduced fertilizer prices in due to the decrease in gas prices. We managed to "warm up" the market - at the beginning of March, demand was actively growing. The grain agreement became a serious catalyst for this process - after its conclusion, demand increased even more. Currently, we are seeing an unusual boom in the fertilizer market for April. According to preliminary estimates, demand growth is at least 15-17%. Farmers have regained their confidence, they are investing in plants protecting tools and fertilizers - in those products that increase productivity and pay off quickly enough during the agricultural cycle," Arestarkhov says.
According to him, 2 weeks after the signing of the grain agreement, farmers are more actively selling agricultural products that were previously stored in warehouses.
As a result, they receive more working capital to ensure seeding.
"This trend especially applies to small and medium-sized farms. Many of them waited and did not sell grain until March, storing it in warehouses, because wholesale players - international traders and holdings that buy grain, set prices on the domestic market quite low, according to farmers, prices. There was significant pent-up demand, which now "shoots up". Someone finally waited for their turn at the ports or on Ukrzaliznytsia, someone - good prices for corn and wheat on the domestic market. Goods are shipped, income is received, more appeared of working capital. This affects the fertilizer market. In addition, now farmers are helped by credit programs subsidized by the Government. We see a gradual recovery of lending for fertilizer deals, promissory note schemes are working," Arestarkhov said.
According to him, the lack of a clear understanding of the period during which the grain agreement will be valid - 60 days or 120 - motivates farmers to actively sell off stocks.
"The logistical problems of farmers have not been fully resolved - there is still not enough grain storage capacity in the country, the volume of transportation by rail and motor vehicles is limited, Mykolayiv ports are blocked, and the price of transshipment in the Odesa Region has increased many times. It is logical that many want for the new season to free up their grain storage capacity and prepare for different scenarios. Much will depend on how the grain agreement works from the end of May. We see the determination of farmers to have a successful planting, no matter what. And this naturally gives optimism to all the adjacent markets, connected with agriculture. That's why OSTCHEM does not reduce the loading of its industrial sites," Arestarkhov said.
According to him, the extension of the agreement in May will lead to further growth of consumption in the fertilizer market.
"Under a positive scenario, the fertilizer market can recover to the pre-war level already by the beginning of 2025. The key factors determining the future market of mineral fertilizers have not changed - the timing of the end of the war and the price of gas, the main ingredient for the production of nitrogen fertilizers. The continuation of the grain agreement and the gradual removing logistical restrictions will allow the agricultural sector to reduce costs and increase margins. The signals are positive for the fertilizer market," he summarized.
As Ukrainian News Agency earlier reported, the nitrogen holding company Ostchem increased the loading of production capacities and reduced the prices of mineral fertilizers.
The Ostchem holding unites the nitrogen chemistry enterprises of Group DF.
Group DF is a diversified international group of companies whose business is represented in 11 countries in Europe and Asia.
The main activities of the group are nitrogen, titanium and gas businesses.
The founder and owner of Group DF is businessman Dmytro Firtash.
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